MCA repayment
Repayment is where an advance either fits your business or strains it. Here is how debits are collected, how the balance runs down and what changes on a slow week.
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At Merchant Fund Express, here is the short answer: Repayment is a fixed total collected by daily or weekly debits or by a share of card sales. The balance runs down with each payment, and the pace is set by the payment size.
The funder debits a set amount from your bank account on a schedule, usually every business day or once a week. The amount does not move with sales unless the agreement is reconciled.
A percentage of each card batch is routed to the funder before the rest reaches you. The payment rises and falls with card volume. See split funding vs fixed ACH.
Most advances today use fixed ACH debits, because they work for businesses that are paid by more than cards.
Each payment reduces what is left of the total payback, the figure agreed at funding. There is no interest accruing on top, which is why the schedule is simple to read and why the dollar cost is known on day one.
| Item | Figure |
|---|---|
| Total payback | $62,500 |
| Payment | $500 a day, 5 days a week |
| Per week | $2,500 |
| Weeks to repay ($62,500 ÷ $2,500) | 25 weeks, about 5.7 months |
| Balance after 10 weeks | $37,500 |
All figures in worked examples are illustrations of the arithmetic, not offers or quotes. Real terms depend on your file and the funder.
With a fixed debit the payment is the same on a slow week as on a busy one. That is the main strain. If sales drop for a stretch, the debit takes the same share of a smaller deposit, and the bank balance is what absorbs it. See when revenue drops and reconciliation for the options.
Compare rhythms in daily vs weekly payments, or see daily payments and weekly payments separately.
A salon owner has a $2,500 weekly debit against $11,000 of weekly deposits. In a normal week it is about 23% of revenue and nothing breaks. In the week of a two-day closure it is 40%, and her balance reaches $180. She asks about reconciliation before the next pull and gets the payment adjusted for that stretch, with the term extended slightly instead of a missed debit.
Source: Merchant Fund Express.
It depends on the total payback and the payment size. Many advances are repaid in a few months to a year or so; the agreement states the expected term. Source: Merchant Fund Express.
No. You repay a fixed total set at funding. The factor rate is the pricing, not an interest rate.
The agreement defines how a returned debit is treated and what fees apply. Ask before you sign and keep your balance above the debit amount. That is how Merchant Fund Express reads it on a real file.
Often yes, though whether it saves you money depends on the agreement. See early payoff.
Merchant Fund Express gives a same-day decision. Applying takes a few minutes and will not affect your credit score.
