A merchant cash advance is not a small business loan; rather, it is a cash advance in exchange for reduced future sales for your business.

Instead of making monthly payments over a period of time, you make daily or weekly payments, plus a fee, until the merchant cash advance is paid in full.

MCAs often feature three-digit annual percentage rates, or APRs, which represent the total cost of a loan, including interest and fees. And the daily or weekly repayment schedule can cause cash flow issues for your business if your sales tend to be erratic or if you’re having a hard time.

Using an MCA calculator can help you determine the total cost of borrowing and determine if a merchant cash advance is appropriate for your business.

Merchant cash advance amount: Enter the total MCA you are borrowing.

Refund conditions : If you know your factor rate, select this option. The factor rate generally ranges from 1.2 to 1.5. A higher factor rate equates to a higher fee you will pay on the merchant cash advance.

In the “factor rate” field, enter this number.

If you do not know your factor rate, select “total reimbursement amount” and enter the amount in the next field.

Payment is based on: Select either monthly credit / debit card sales or fixed daily payment.

If you choose monthly credit / debit card sales, enter your estimated monthly credit or debit card sales in the next field.

In the “Percentage of monthly credit / debit card sales” field, enter the percentage (for example 10%) that the merchant cash advance provider will deduct from your monthly credit or debit cards until the total amount borrowed is repaid.

If you choose a fixed daily payment, enter the amount you expect to repay daily in the next field.

The approximate daily payment of: This is the amount you can expect to pay on a daily basis until your MCA is fully paid off.

For the period of: This is the time it will take to pay off the MCA.

A total reimbursement amount of: This is the total amount you will pay for the financing, including fees.