This free calculator from Kitehill Commercial Capital, a small-business funding broker in Greenville, South Carolina, shows a merchant cash advance's total payback, cost and estimated time to remit under different daily sales levels. An advance is not a loan; funders set the factor and terms. Results are illustrative arithmetic only.
What a holdback percentage is
With a percentage-based advance, the funder collects a set share of each day's card sales, called the holdback, until the purchased total has been delivered. The holdback stays the same; the dollar amount changes with sales. That is why a slow month lengthens the arrangement rather than raising the daily amount.
How to run three scenarios
- Enter the advance amount, the factor as written in the offer and the holdback percentage.
- Enter your average daily card sales for a normal month. Note the estimated time to remit.
- Replace the sales figure with a typical slow month's daily average, and note the result.
- Replace it with a busy month's daily average, and note the result.
Total payback and cost stay the same in all three runs. Only the time to remit changes, because the same total is being collected from more or less sales each day.
Reading the results
| Month type | Daily sales compared with normal | Time to remit compared with normal |
|---|---|---|
| Slow | 70 percent of normal | About 1.4 times as long |
| Normal | 100 percent | Baseline |
| Busy | 130 percent of normal | About 0.8 times as long |
Hypothetical sales levels chosen to show the arithmetic, not typical figures. With a percentage holdback, time to remit moves inversely with sales. With fixed daily debits the opposite happens: the time stays the same, but in a slow month each debit takes a larger share of the day's sales. A debit sized at one-tenth of normal daily sales becomes about one-seventh of sales in a month running at 70 percent.
Checking an offer before you sign
- Write down the cash you will actually receive after anything deducted at funding.
- Multiply the advance by the factor to confirm the total to be delivered matches the agreement.
- Run the calculator with your slowest month of the past year, not just a normal one.
- Check whether collection is a percentage holdback or a fixed debit, and whether reconciliation is available.
- Ask whether the agreement restricts other financing while the advance is outstanding.
Then compare the total cost with a working capital loan or line of credit for the same need before deciding.
What the calculator leaves out
Charges deducted at funding, reconciliation adjustments, and any second advance. Days without card sales also stretch the period. How merchant cash advances work covers stacking, reconciliation and default, and the resources section has the other calculator.
By Kitehill Commercial Capital · Updated
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