How to calculate MCA payback
Your MCA payback is set the moment you sign. Here is the exact math to find your total payback, your cost of capital, your daily remittance, and how long repayment really takes.
This article is educational and is not an offer of credit.
Key takeaways
- Total payback = advance amount times the factor rate, a flat figure with no compounding.
- Cost of capital is the total payback minus the advance amount.
- Daily or weekly remittance is the total payback divided by the number of business days or weeks in the term.
- On a percentage holdback, the dollar remittance moves with your sales, so the term flexes.
- Paying faster does not shrink the fixed total on its own unless your funder offers an early-payoff discount.
Start with the factor rate, not an interest rate
A merchant cash advance is the purchase of a portion of your future receivables, so it is not priced with an interest rate the way a loan is. It is priced with a factor rate, a flat multiplier that usually lands between about 1.1 and 1.5. That single number sets your entire payback at signing.
This is the most important thing to understand before you do any math. The factor rate is not an annual percentage. It does not compound. It is a fixed multiplier applied once to the advance amount, and the result is the total dollar figure you have agreed to remit. Everything else, including your daily payment and your term, flows from there.
Step 1: Calculate your total payback
The first number to find is total payback, sometimes called the payback amount or the remittance total. The formula is simple:
Total payback = advance amount times factor rate.
Take our worked example. You accept a $50,000 advance at a 1.40 factor rate. Your total payback is $50,000 times 1.40, which is $70,000. That $70,000 is the full amount you have agreed to remit from your future sales. It is locked in the moment you sign, regardless of how the next year unfolds.
If you only know your daily remittance and your term and want to check the factor rate a funder quoted, you can run the same math in reverse with our factor rate calculator.
Step 2: Find your cost of capital
Cost of capital is what the advance actually costs you in dollars. It is the difference between what you remit and what you received:
Cost of capital = total payback minus advance amount.
In the example, that is $70,000 minus $50,000, which is $20,000. So the price of borrowing $50,000 of fast working capital here is $20,000. Stating the cost as a plain dollar figure is the clearest way to judge an offer, because it cuts through the factor rate and tells you exactly what you are paying for speed and access.
Step 3: Calculate the daily or weekly remittance
Most advances are repaid through a fixed amount pulled from your account every business day, or in some cases every week. To find that figure, divide the total payback by the number of payments in the term:
- Daily remittance = total payback divided by the number of business days in the term.
- Weekly remittance = total payback divided by the number of weeks in the term.
- A typical month has about 21 to 22 business days, so a 12-month daily term is roughly 252 to 264 business days.
Put the example together
Stay with the $50,000 advance at a 1.40 factor and a roughly 12-month daily term. You owe $70,000 total. Spread across about 250 business days, that is close to a $280 daily remittance pulled from your account on every business day until the $70,000 is satisfied.
That single daily number is what actually hits your cash flow, so it is worth modeling against a slow week, not just an average one. You can run your own advance amount, factor rate, and term through the free MCA calculator to see your total payback, cost of capital, and daily remittance side by side in seconds.
When the term flexes: percentage holdback
Some advances do not use a fixed daily dollar amount. Instead they take a set percentage of your daily card or bank deposits, often called a holdback. On a busy day the dollar remittance is larger, and on a slow day it is smaller.
With a holdback, the total payback is still fixed at the factor rate, but the calendar is not. Strong sales finish the advance faster and weak sales stretch it out. To estimate the term, divide the total payback by your expected average daily remittance, which is your average daily deposits times the holdback percentage. This is also why an early-payoff figure on a holdback can be hard to pin down without asking your funder directly.
Does paying early change the math?
This is the question that trips up the most owners. Because the total payback is fixed by the factor rate rather than accruing day by day, paying the balance off faster does not automatically reduce the dollars you owe. Remitting $70,000 in eight months instead of twelve still means remitting $70,000, unless your agreement says otherwise.
Some funders do offer an early-payoff or prepayment discount that lowers the total if you settle ahead of schedule. That is a real way to save, but it is never assumed. Always ask whether a discount exists and get the figure in writing before you sign. If you also want to see the advance expressed as an annualized cost for comparison, our how we calculate true APR methodology shows the math, and our cornerstone guide on merchant cash advance cost covers factor-rate pricing in full.