The MCA Calculator is a useful tool to help business owners understand how much an MCA costs and compare the cost of this type of financing with other types of small-business funding. The calculator takes into account several important variables, including the total advance amount, factor rate (expressed as either a decimal or a percentage), holdback percentage (the portion of daily sales withheld for repayment), estimated sales volume, and any associated fees or charges.
The Merchant Cash Advance (MCA) is a type of business loan that provides a lump sum payment in exchange for a fixed percentage of the business’s future credit and debit card sales. This type of funding is often used as a last resort for business owners who cannot qualify for other types of small-business financing. It is an expensive form of credit, so it should be avoided if possible.
One of the key differences between a merchant cash advance and other types of business financing is that there are no interest rates involved with this type of funding. However, that doesn’t mean that the cost of an MCA is not transparent. In fact, the exact cost of an MCA is quite easy to calculate. A simple MCA calculator can give a business owner an accurate idea of how much an MCA will cost.
To use an MCA Calculator, first enter the estimated amount of the merchant cash advance. Then, select the type of factor rate you’ll be charged (either a decimal or a percentage). If you’ve been provided with a number in either format, simply add a “1” to the beginning of it to convert it to a decimal. Finally, select the term length of the MCA in months and days (or select a default value). Finally, input any additional fees or charges into the calculator to see the full cost of the financing.
Once you’ve entered the above information, click on the “calculate” button. The MCA Calculator will then provide you with an estimate of the total advance amount, average daily payments (based on the estimated holdback percentage), cents per dollar costs, rough APR, and approximate days to repay.
Using an MCA calculator is a great way to assess the impact of an MCA on your business’s finances, weigh the benefits against the costs, and make a well-informed funding decision. However, before making a final decision, it is always advisable to speak with an experienced business finance professional. This will ensure that you understand the full implications of any financing option you choose, and make an informed decision about what is best for your company. Visit Lendio’s website to learn more about the benefits and risks of merchant cash advances. Our team is happy to answer any questions you may have! You can also request a free merchant cash advance quote online. We look forward to helping your company grow and succeed. To get started, simply fill out our quick and easy online application.