MCA APR Calculator
Enter your merchant cash advance factor rate, advance amount, and repayment details to instantly see your estimated APR and total dollar cost. Supports both fixed daily ACH and holdback / retrieval rate repayment structures.
Required disclosure in CA, NY, UT, VA, IL, NJ and growing. Free to use.
Advance Details
The gross amount the funder advances
Fixed multiplier — not an interest rate. Typical range: 1.10–1.50
Amount debited per payment
Estimated APR
90%
Moderate
Simple disclosure APR · ~4.0-month term
What Is MCA APR — and Why Does It Matter?
A merchant cash advance doesn't technically have an interest rate. Providers quote a factor rate — a fixed multiplier like 1.25 or 1.40 — that determines how much you repay regardless of how long repayment takes. But that framing makes comparison nearly impossible.
The estimated APR converts that multiplier into the same annualized metric used for every other form of credit — credit cards, SBA loans, lines of credit. When you see that a 1.35 factor rate on a 6-month advance annualizes to roughly 130% APR, you can make a real decision about whether that capital deployment makes sense for your business.
Several states have recognized this. California (SB 1235 / SB 362), New York (CFDL), Utah, Virginia, Illinois, and New Jersey now require MCA providers to disclose an estimated APR in every offer to businesses in those states.
How to Convert Factor Rate to APR
The calculation has three steps:
- Calculate the Right to Receive (RTR): Advance Amount × Factor Rate = total repayment owed.
- Calculate total dollar cost: RTR − Advance Amount. This is the flat fee you pay for the capital.
- Annualize based on term: (Total Cost ÷ Advance) × (365 ÷ Term Days). The term is derived from your daily payment or holdback rate.
Example: $50,000 advance × 1.30 factor = $65,000 RTR, $15,000 total cost. At a $750 daily ACH payment (business days), repayment takes about 87 business days (~120 calendar days). APR ≈ 91%.
The same $50,000 at 1.30 factor paid back over 4 months instead of 6 would be approximately 137% APR— the factor rate didn't change, but faster repayment makes it more expensive on an annualized basis. That's the key difference between a factor rate and a true interest rate.
ACH vs. Holdback Repayment: What Changes
MCAs are repaid one of two ways. Your APR calculation differs depending on which applies:
Fixed ACH (Daily / Weekly)
A set dollar amount is debited from your bank account on a fixed schedule. Term is predictable. Repayment doesn't adjust if your revenue drops. This is the most common structure for newer MCAs.
Holdback / Retrieval Rate
A percentage of daily card sales is withheld. Term flexes with revenue — slow months take longer, strong months finish faster. The APR calculation uses your average monthly revenue to estimate the term.
True holdback advances have a somewhat lower APR than fixed ACH at the same factor rate, because slow revenue periods extend the term (lowering the annualized rate). Fixed ACH is more expensive when revenue drops, because you're paying the same amount regardless.
What APR Range Is Normal for a Merchant Cash Advance?
| Factor Rate | 6-Month Term | 4-Month Term |
|---|---|---|
| 1.15× | ~30% APR | ~45% APR |
| 1.25× | ~60% APR | ~91% APR |
| 1.35× | ~86% APR | ~131% APR |
| 1.45× | ~110% APR | ~166% APR |
| 1.50× | ~122% APR | ~183% APR |
Approximate estimates. Actual APR depends on exact repayment schedule.
Most MCA offers cluster between 1.20 and 1.45. The difference between a 1.25 and a 1.45 deal at 5-month terms is the difference between ~75% APR and ~130% APR — a number worth knowing before you sign.
Frequently Asked Questions
Does factor rate or APR matter more for an MCA?
Both matter, but for different reasons. The factor rate tells you the total dollar cost at a glance — straightforward and certain. The APR tells you the cost relative to time, which is what you need for comparison. If you're choosing between a 1.30 factor/5-month MCA and a 1.35 factor/8-month MCA, the APRs (not the factor rates) tell you which is more expensive per year of capital use.
Why does paying faster increase my APR?
Because the factor rate is fixed — you pay the same total cost whether you repay in 3 months or 8. Faster repayment means the same fee is compressed into a shorter period, which makes the annualized rate higher. This is why factor rates obscure cost: a 1.25 factor rate at 3 months is ~200% APR, while the same factor rate at 12 months is ~50% APR.
What states require MCA APR disclosure?
As of 2026: California (SB 1235, effective Dec 2022; strengthened by SB 362), New York (Commercial Financing Disclosure Law, effective Aug 2023), Utah, Virginia, Georgia, Connecticut, Illinois, and New Jersey. Florida legislation is pending. The CFPB has issued guidance suggesting federal standards are forthcoming.
Can I prepay an MCA early?
Possibly, but it may not save money. Many MCA agreements require the full RTR (advance × factor) regardless of early payoff, which means prepaying doesn't reduce your total cost — it only shortens the term. Some funders offer early payoff discounts. Always check your agreement before assuming prepayment reduces what you owe.
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This calculator provides estimated APR based on the simple disclosure method required by state commercial financing disclosure laws. It is for informational purposes only and does not constitute financial advice. Actual APR may vary. For the IRR-based (true) APR, the estimated figure here is a close approximation for most MCA structures.