A merchant cash advance gives your business money today in exchange for a share of your future card sales. It isn't a loan. There's no interest rate, no fixed monthly payment and no set due date. Instead, you and the funder agree on a total amount to be delivered, and a small percentage of your daily card sales goes toward it until it's done.
The four numbers that matter
- The advance: the amount of funding you receive.
- The factor rate: the number that sets your total cost. Multiply the advance by the factor rate to get your total payback.
- The total payback: the full amount delivered to the funder over time.
- The daily share: the percentage of each day's card sales that goes toward the payback. You may also hear it called the holdback.
A $100,000 example
Say RPI provides a $100,000 advance at a factor rate of 1.30. Your total payback is $130,000. A 2.5% origination fee ($2,500) and a $395 documentation fee come out of the advance, so $97,105 lands in your bank account.
After that, 10% of each day's card sales goes to RPI through your card processor. On an $8,000 sales day, that's $800. At that pace, the advance finishes in about 163 business days, or roughly seven and a half months. Your total cost is $32,895: the $30,000 difference between the advance and the payback, plus $2,895 in fees.
What happens on a slow day
Because you repay a percentage of sales, your payment follows your business. A $4,000 day sends $400, not $800. Slow weeks take a little longer to finish, but they don't create a missed payment.
When a merchant cash advance makes sense
An advance works best for short-term needs that bring in revenue: equipment that adds capacity, inventory for a busy season, or staff to take on more work. It also suits businesses with steady card sales that want flexible payments.
It's usually not the right tool for long-term needs like real estate, for covering ongoing losses, or for a business already carrying other advances. If you qualify for a lower-cost bank loan and can wait for it, that may be the better choice.
How RPI does it differently
We don't fund on top of existing advances. Repayment runs through your card processor, so there are no fixed daily withdrawals. Every offer shows the advance, total payback, daily share, estimated time to finish and every fee in plain English before you sign.
Want to try your own numbers? Open the MCA calculator and change the advance, factor rate and holdback to see how each one moves your total payback and time to finish.
This example is for illustration only. Your actual amount, factor rate, percentage and timing depend on underwriting.