The MCA Calculator is a tool designed to help small business owners and finance professionals better understand the true costs associated with merchant cash advances. This tool estimates repayment terms and daily or weekly payment amounts based on the advance amount and factor rate, making it easier to assess whether an MCA is the right funding option for a particular business. The calculator also allows users to experiment with various advance amounts, factor rates, and remittance frequencies, ensuring that they fully understand the implications of any potential deal before making a decision.
The calculation process is quick and easy. A simple user interface with built-in validation tools provides a comfortable experience that allows for accurate, defendable calculations and helps minimize risk. This enables financial professionals to be more confident when analyzing data, and improve overall TVC.
Unlike traditional financing, MCAs do not involve interest rates and repayment terms are flexible and variable according to your company’s revenue intake. However, these unique aspects of MCA financing make them harder to compare to other types of working capital loans. The MCA Calculator is a valuable tool that helps you assess the impact of an MCA on your company’s cash flow, weigh the benefits against the cost, and compare multiple offers from different lenders.
To use the MCA Calculator, simply enter the advance amount you are considering in the first field. Then, in the “percentage of monthly credit/debit card sales withheld” field, enter a percentage (example: 10%) that you expect the MCA provider to take from each month’s sales until the entire advanced amount is paid back. Finally, in the “approximate daily payment” field, enter the amount you expect to pay the MCA lender each day until your advance is paid back.
Once you have entered all of the necessary information, click calculate to see the results. The calculator will display the total advance amount and the total payback amount, based on the factors entered and the remittance frequency. The total payback amount will include the factor rate multiplied by the advance amount, as well as any one-time fees that your MCA finance provider might require.
The MCA Calculator is a convenient way to estimate the cost of an MCA, but it is important to keep in mind that factor rates are not usually used in consumer lending and can be a bit more confusing for some business owners. It is important to note that the calculator will display the fee as a decimal, so if you were provided with a factor rate in percentage form, it is best to add a leading zero to the number to convert it to decimal. The calculator will also provide a rough estimate of the days it takes to repay the advance, but this will vary slightly depending on the actual remittance frequency. It is therefore best to consult a financial professional for more precise figures.