A merchant cash advance (MCA) is an alternative form of financing that offers a quick infusion of funds in exchange for a fixed percentage of your business’s future credit and debit card sales. While MCAs can be an effective way to bridge gaps in funding, they come at a high cost. To help you understand the true cost of an MCA, we’ve put together this free MCA Calculator. The tool allows you to input various MCA advance amounts, factor rates, and terms to compare the different offerings available to your company. This helps you assess the cost and benefits of each option, ensuring that you’re making the best decision for your business.
The MCA Calculator is an easy-to-use tool that estimates key MCA repayment metrics, including daily payment amounts, cents on the dollar costs, rough APRs, and approximate days to repay. These calculations will provide you with the information necessary to make an informed decision when considering a merchant cash advance for your business.
To use the MCA Calculator, begin by entering the estimated total advance amount you expect to receive from your MCA lender. Then enter the estimated factor rate, which is similar to an interest rate and determines how much you’ll pay for the advance. Finally, enter the holdback rate, which is the percentage of each credit and debit card sale that your MCA provider will take until the purchased amount is repaid.
Once you’ve entered this information, the tool will display several results, including the advance amount, total payment, and daily percentage rate. The advance amount will be the amount of money you’ll receive from your MCA lender, and the total payment will be the sum of the loan amount plus any additional fees you will owe. The daily percentage rate is the percentage of each day’s credit/debit card sales that your MCA provider will withhold from your business until the borrowed amount is repaid in full.
This tool is especially useful for business owners who are in the process of evaluating MCA options for their company. By using the MCA Calculator, they can better understand the repayment schedule and cost of an MCA and other types of working capital financing. This will ensure that the proposed MCA is a good fit for their business’s needs and will help them avoid unnecessary expenses in the long run. While we strongly recommend exhausting all other forms of financing before considering an MCA, this calculator is a great resource to help you evaluate the cost of an MCA against the alternatives. Click the button below to get started with the MCA Calculator..