Guide

How much does a merchant cash advance really cost, in dollars?

Put in the numbers from your offer and see what it really costs: what you pay back, what reaches your account, and what each payment takes. The guide below explains every line.

One advance, in dollars

Say a funding provider offers a $20,000 advance at a factor rate of 1.30 and takes $600 in fees up front.

• Total you repay: $20,000 × 1.30 = $26,000
• Reaches your account: $20,000 − $600 = $19,400
• Cost: $26,000 − $19,400 = $6,600

The factor rate alone suggests $6,000. The fees are part of the cost too. More on the math in what a factor rate is.

How big is each payment?

• Fixed daily payment over six months: $26,000 ÷ 126 business days is about $206 a day.
• 10% of sales: in a $40,000 month, $4,000 goes out, and repayment takes about six and a half months. In $30,000 months, closer to nine.

The total is $26,000 either way. With a fixed payment, you carry the slow month. With a percentage, repayment stretches instead. See what happens if sales drop.

What does it cost per month?

$6,600 over six months is $1,100 per month of use. Repaid in three months, it's $2,200 a month. That's why paying early without a discount doesn't save money. See paying off a merchant cash advance early.

Will it fit your weeks?

A monthly average hides the hard days. $206 a day is about 12% of $36,000 in monthly deposits, which sounds fine. Now take a business that starts the month with $5,000:

• Week 1: deposits $4,000, bills $9,000, payments $1,030. End: −$1,030
• Week 2: deposits $14,000, bills $6,000, payments $1,030. End: $5,940
• Week 3: deposits $9,000, bills $8,000, payments $1,030. End: $5,910
• Week 4: deposits $9,000, bills $7,500, payments $1,030. End: $6,380

The month looks healthy. Week 1 comes up $1,030 short. Find your lowest balance, and ask whether the payment still clears that day.

One more check: the money has to earn more than it costs. If it covers a gap in timing, it can work. If the business is already losing money, it usually doesn't.

Every number on this page is an illustration, not an offer. Real offers depend on the funding provider and your business.

Why dollars, not an annual rate

A merchant cash advance is generally structured as the purchase of a portion of future receivables, with no fixed term. An annual rate would swing with your sales. The total in dollars doesn't, and you can check it against your agreement.

Seven questions before you sign

1. What is the total repayment amount?
2. What is the expected payment frequency?
3. Is the payment variable or scheduled?
4. Are reconciliation or adjustment rights available?
5. What fees or deductions apply?
6. What net amount will reach the business account?
7. Does the agreement include an early-payment benefit?

Get the answers in writing.

Haven does not charge an upfront application fee. If a transaction closes, Haven may receive compensation from the funding provider, and that may be reflected in how the provider prices it. Ask any broker for the total in dollars. Ask us too.

How Haven helps

A few quick questions, then a short call. Bank statements are the starting point; providers may ask for more. We bring back any offers funding providers make and walk you through each one in dollars. You see the full terms before anything is signed, and you're not required to accept.

Haven is a commercial-financing broker, not a lender, and does not make credit decisions. Approval, pricing, terms and timing are set by the funding provider. Submitting a form is not an approval or an offer of financing. This page is general information, not financial, legal or tax advice.