The Cost Of A Merchant Cash Advance
Are you considering a merchant cash advance for your business but can’t make sense of the rates and costs quoted? ExpressBusinessLoans.com can help de-mystify some of these questions.
Merchant Cash Advance Rates
Merchant cash advances are not loans. The transaction is structured as a sale of revenue from your business’ future credit card sales for an advance amount a discount. Depending on what program your business falls into a merchant cash advance approval will typically be 10-20% of your annual credit card sales. Because your credit card sales will fluctuate daily the repayment period is a projection. Most funding companies will offer up to 6 month projections. At ExpressBusinessLoans.com we can offer merchant cash advance projections up to 18 months. Your funding adviser should give you the factor rate on the merchant cash advance offer. These rates can vary from 1.15 to 1.45 depending on the projection offered.
Merchant Cash Advance Split or Holdback Percentage
Many small businesses mistake the factor rate for the split percentage. A merchant cash advance split or holdback amount is the percentage of sales that will be diverted to repayment.
Upfront Fees On Merchant Cash Advance
Any small business owner should be wary of paying an upfront fee to receive a merchant cash advance quote or approval. ExpressBusinessLoans.com does not charge any upfront fees.