How Much Does a Merchant Cash Advance Cost?

Business cash advances or merchant cash advances are easier and quicker to get than bank loans, but they are also much more expensive.  Providers usually charge a factor rate (sometimes called a “provider fee”) of 30 to 35 percent, but this rate can be much more depending on how long you have been in business, your current sales volume, and other factors. 

If you accept a cash advance, you will be paying back the advance amount plus this “fee.”  For Example:


Advance Amount


Factor Rate


Repayment Amount

$13,500 ($10,000 + $3,500 Provider Fee)

In the above example, assuming daily transactions total $1000 on average with a typical daily retrieval rate of 25%, the business would be obligated to pay $250 each day to the merchant cash advance provider in exchange for the initial advance. 

The costs of business factoring depend largely on whether the accounts you “sell” are collected on.  When a factoring services provider buys an invoice, it usually will pay anywhere from 60 to 90 percent of the amount your business would collect if it remained a factoring accounts receivable.  The provider will collect on the invoice, and then return the balance to you, less a “factoring fee.”

For example, if an invoice for $10,000 is sold for 60% of its value with a 15% factoring fee, the factoring service provider will make an immediate payment of $6,000.  Once the customer has paid the provider, the provider will make a payment of $2,500, or the remaining $4,000 from the outstanding invoice less the 15% fee. 

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