Cloverbridge Credit built this merchant cash advance calculator for card-heavy businesses in Suffolk, Virginia. Enter an advance, factor, holdback and daily card sales to see the total collected, the cost and an estimated collection period. The page shows how to turn that into an annualized figure by hand, and how to check cash flow and reserves before signing.
Factor, holdback and daily card sales: entering a Suffolk, VA offer
Take the figures from the written offer. The advance is the amount paid to you, before or after fees; enter the amount you will actually receive to see the true cost. The factor multiplies the advance to give the total to be collected. The holdback is the share of daily card sales the provider keeps. Average daily card sales come from your last few processing statements, not from a good week.
Annualized cost of an advance: the by-hand method for Suffolk, VA restaurants
Illustration only, invented figures: an invented $15,000 advance priced with a factor of 1.38 collects $20,700, a cost of $5,700. At an invented 10% holdback on $900 of daily card sales, the provider collects about $90 a day, so the total is collected in about 230 days of sales (our arithmetic).
A straight-line annual figure divides the cost by the advance and scales it to a year: about 60 percent here (our arithmetic). Because the amount outstanding shrinks every day while the cost stays fixed, the true annualized cost, the figure a loan APR would show, is higher than that straight-line number. Use the straight-line figure only as a floor when comparing with a loan's stated rate.
Cash flow check: can a Suffolk, VA home health agency carry the daily debit?
Before signing, set the daily collection against a normal week. In the invented example above, about $90 a day is about $630 a week of card sales (our arithmetic). Subtract that from the week's gross profit, not from sales, and check what is left for payroll, rent and supplies. An agency paid mainly through insurer claims has little card volume for a holdback to draw on, which is a sign that a line of credit sized on receivables fits better.
Cash reserve before signing: a Suffolk, VA quick-service restaurant's buffer
An advance collects every business day, including slow ones. A restaurant should know how many days of operating costs it holds in the bank before adding a daily debit. If a slow week would leave the account short, the advance adds risk rather than removing it. Compare the offer with a line of credit and read the merchant cash advance page for alternatives.
Bring the offer and your processing statements to a request if you want it set beside other funding types.
By Cloverbridge Credit · Updated