Phone:
(888) 201-2860
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Address
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Jersey City, NJ 07306
Phone:
(888) 201-2860
Business Hours
Mon-Fri: 9AM - 6PM
Address
97 Newkirk Street, 3rd Floor
Jersey City, NJ 07306
If you’re in the thick of evaluating financing options for your business, understanding the real cost of a merchant cash advance (MCA) is essential. APRs, factor rates, daily payments—it can all feel like reading hieroglyphics. But when you’re borrowing thousands and repaying more, clarity is power.
Let’s walk through how to calculate MCA costs with precision and confidence—without needing a finance degree. No fluff. Just real numbers, smart strategy, and some insider tips. We’ll also show you how to use a trusted Merchant Cash Advance Calculator to simplify the entire process.
Not sure how Merchant Cash Advances work? Get insider tips and real examples in our Ultimate MCA Guide— Read this before you apply.
Key Takeaways on MCA Cost Calculations
Understand Your APR: APR reflects the true annualized cost of a merchant cash advance and varies with term length.
Simple Interest Shows Total Cost: Use simple interest to compare total repayment across MCA offers.
Daily vs. Weekly Payments Matter: Your MCA cost can shift significantly based on payment frequency and number of payments.
Use a Merchant Cash Advance Calculator: Tools like AMP Advance’s MCA calculator (also called a business advance repayment calculator or MCA APR calculator) can help visualize your real costs quickly.
Simple interest is the total cost of the MCA expressed as a percentage of the amount funded. It does not consider the time it takes to repay the advance.
Formula: (Payback – Funded Amount) ÷ Funded Amount
Example:
Funded: $10,000
Payback: $13,000
Simple Interest = ($13,000 – $10,000) ÷ $10,000 = 30%
Also consider closing costs (e.g., origination fees or underwriting charges). These upfront deductions reduce the net amount received but don’t reduce your repayment. So, if $500 in fees is withheld from a $10,000 advance, your net received is $9,500, yet you’re still repaying $13,000—raising your effective cost.
APR (Annual Percentage Rate) takes into account the time it takes to repay. It shows the effective annualized cost of the MCA.
A common mistake is to use 30 calendar days per month in MCA APR calculations. However, MCA payments are typically made only on business days—and to be conservative, it’s smart to use 20 business days per month to reflect bank holidays and operating conditions.
For a deeper dive into how APR works across financial products, check out this APR guide by Investopedia.
Funded: $10,000
Payback: $13,000
Daily Payment: $81.25
Number of Payments: 160 business days
Term = 160 ÷ 20 = 8 months
APR ≈ (0.30 ÷ 8) × 12 = 45.0% APR
Funded: $10,000
Payback: $13,000
Weekly Payment: $406.25
Number of Payments: 32 weeks
Term = 32 ÷ 4 = 8 months
APR ≈ (0.30 ÷ 8) × 12 = 45.0% APR
Term | Simple Interest | APR |
---|---|---|
160 Business Days | 30% | 45.0% |
32 Weeks | 30% | 45.0% |
Both options have the same simple interest. But the APR shifts slightly based on how you calculate repayment time. Using 20 business days and 4 weeks per month gives a more accurate, conservative estimate.
Factor Rate | Funded | Payback | Simple Interest | APR |
---|---|---|---|---|
1.20 | $10,000 | $12,000 | 20% | ~40% |
1.30 | $10,000 | $13,000 | 30% | ~60% |
1.40 | $10,000 | $14,000 | 40% | ~80% |
Even small changes in factor rate have a big impact on cost—especially over shorter terms.
Curious how fixed fees compare to compound interest? This guide from the SBA explains common loan structures and costs.
Factor rates (e.g., 1.30) tell you how much you’ll repay, but not how fast. That missing context can make an offer look affordable when it’s actually expensive.
Example: $10,000 × 1.30 = $13,000
If you repay that over 6 months with daily payments vs. 12 months weekly, the cost and impact on cash flow are drastically different.
Here’s a breakdown of the key inputs used in most cash advance calculators and how each impacts your MCA costs:
Amount Seeking: The amount you are seeking or have received from the MCA lender. This is expressed as a dollar amount.
Factor Rate: The multiplier used to determine your estimated total payback amount. It’s a fixed fee, not compound interest. Input the factor rate your lender quoted.
Term: The duration, in months, over which you will repay the advance. Most cash advances range between 1–18 months.
Estimated Daily Payment: Your approximate daily payment, based on your loan amount, factor rate, and term.
Estimated Weekly Payment: Your approximate weekly payment if your repayment frequency is weekly instead of daily.
Estimated Total Payback: The total repayment obligation. This includes your original advance plus the factor fee, which functions like fixed interest.
Using a Merchant Cash Advance Calculator is easy and gives you quick insight into your total cost.
Enter the amount you’re seeking
Add the factor rate and the term in months
Select whether your payments will be daily or weekly
The calculator will auto-generate your estimated daily and weekly payments based on these details.
View your estimated daily or weekly repayment
Your repayment frequency will depend on what your business qualifies for—some lenders may offer weekly payment flexibility
The calculator shows your total remittance amount
This is the full amount you’ll repay: the funded amount + the fixed fee from your factor rate
This becomes your MCA loan balance. As you make payments, the balance will decrease accordingly
Instead of doing the math manually, plug your numbers into the Merchant Cash Advance Calculator. It calculates:
Payback amount
Simple interest
APR (based on 20 business days/month and 4 weeks/month)
Number of payments
It’s the easiest way to make sure you’re comparing real apples to apples. A great MCA calculator can highlight repayment term impacts and prepayment opportunities in seconds.
Term Length: Shorter terms = higher APRs
Repayment Frequency: Daily costs more than weekly
Credit Score: Better credit usually = better offers
Cash Flow: Strong, consistent deposits can lower factor rates
Industry Risk: Some sectors are flagged high-risk and priced higher
Many funders offer a prepayment discount if you pay the full balance early. This can dramatically reduce your effective cost—especially on shorter terms. Always ask if your offer includes one.
✔ Ask for Weekly Payments – Weekly terms can reduce APR and ease cash flow
✔ Negotiate Your Factor Rate – Even 0.05 lower can save thousands
✔ Compare Offers Using a Calculator – Don’t rely on quoted daily payments. Use a dedicated MCA calculator to model total cost impact
✔ Work With a Broker – Brokers like AMP Advance give you access to better structured offers
✔ Explore Alternatives – Check business lines of credit and equipment loans
Don’t fall for the low daily number. Know your real cost:
Calculate both simple interest and APR
Use 20 business days/month and 4 weeks/month—not calendar assumptions
Understand the impact of term and frequency
Factor in any fees or closing costs to your net funding amount
Ask about prepayment discounts that may lower your total obligationi
Use (Cost ÷ Funded Amount ÷ Term in Months) × 12. Assume 20 business days/month and 4 weeks/month.
Most range from 20% to 50% depending on risk and term.
Generally yes—they spread out repayment, reducing APR.
Because repayment happens much faster than a typical loan, usually daily.
Whether you’re evaluating multiple offers or trying to make sense of your payback terms, our MCA Calculator gives you instant clarity. Compare factor rates, APR, and total repayment—so you can choose the smartest deal with confidence. No pressure. Just transparent numbers and expert guidance from AMP Advance.
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