Merchant cash advance calculator

A multiplier that sets the total you repay. A factor rate of 1.20 on £50,000 means repaying £60,000. It isn’t an annual interest rate, so a short repayment period can mean a high effective annual cost.

We arrange MCAs for UK limited companies, LLPs and partnerships of four or more partners that take regular card payments.

Usually not: because the total is fixed by the factor rate, repaying early often doesn’t reduce the cost. Check the terms of any offer.

Technically it is often structured as a purchase of future card receivables rather than a loan, which is why it uses a factor rate instead of an interest rate. In practice it works much like short-term finance, with a fixed total to repay. Directors may still be asked for a guarantee, so read the agreement carefully.

Subtract 1 from the factor rate to get the cost as a share of the advance: 1.20 means 20p of cost per £1. To compare with an annual rate, you also need the expected repayment period, because the same cost over a shorter time is a higher annual rate. Ask each provider how long repayment is likely to take at your usual takings.

The holdback is the share of your card takings that goes towards repaying the advance until the total is cleared. It is usually collected automatically through your card payment provider or by agreed bank transfers. A higher holdback repays faster but leaves less of each day’s takings for running costs.

Because repayments follow card takings, a quiet period usually means smaller repayments and a longer time to repay, rather than a missed fixed payment. Agreements differ, though: some include minimum performance terms or switch to fixed collections in certain cases. Read how a sharp fall in takings is handled before you sign.