How to Calculate Merchant Cash Advance Payments, Step by Step

To calculate merchant cash advance payments, multiply the advance by the factor rate to get the purchased amount, then divide that by the number of scheduled remittances. For example, a $25,000 advance at a 1.26 factor rate has a purchased amount of $31,500. Spread over about 126 business days (roughly six months), that is $250 per business day.

That covers fixed daily remittances. Below, we walk through weekly schedules, holdback-based (split-funding) advances, payoff tables, and how fees change the picture, with every step shown.

The four numbers you need

Number	What it is	Example
Advance (purchase price)	Money you receive before fees	$25,000
Factor rate	Multiplier that sets the total	1.26
Term or schedule	Number of remittances	126 business days
Holdback (if split funding)	Percentage of sales remitted	10% of card sales

New to these terms? See factor rate explained and holdback percentage explained.

Method 1: fixed daily remittances

Most ACH-based advances use a fixed daily amount on business days (usually Monday through Friday, excluding bank holidays).

Step 1: Find the purchased amount

Purchased amount = advance x factor rate

$25,000 x 1.26 = $31,500

Step 2: Find the cost of capital

Cost of capital = purchased amount - advance

$31,500 - $25,000 = $6,500

Step 3: Count the remittances

A practical rule of thumb is about 21 business days per month.

Term	Approximate business days
3 months	63
4 months	84
6 months	126
9 months	189
12 months	252

Your agreement sets the actual schedule, and holidays can shift it slightly.

Step 4: Divide

Daily remittance = purchased amount / number of remittances

$31,500 / 126 = $250 per business day

Step 5: Build a simple payoff table

At about 21 business days a month, $250 per day is about $5,250 a month.

End of month	Remitted that month	Total remitted	Remaining balance
1	$5,250	$5,250	$26,250
2	$5,250	$10,500	$21,000
3	$5,250	$15,750	$15,750
4	$5,250	$21,000	$10,500
5	$5,250	$26,250	$5,250
6	$5,250	$31,500	$0

Notice that halfway through the term, half the purchased amount remains. Unlike a typical loan, there is no interest front-loading, because the cost was fixed at signing.

Step 6: Find your daily cost

Daily cost = cost of capital / number of remittances

$6,500 / 126 = about $51.59 per business day

This is a handy way to judge whether the money is earning its keep. If the funds will not produce more than about $52 of extra profit per business day over six months, the advance costs more than it returns.

Method 2: fixed weekly remittances

Weekly schedules use the same logic with about 52 weeks per year.

Weekly remittance = purchased amount / number of weeks

For the same $31,500 over 26 weeks: $31,500 / 26 = about $1,211.54 per week. In practice, the last remittance is often adjusted by a few cents so the total comes out exactly.

Schedule	Number of remittances	Remittance	Total
Daily	126	$250.00	$31,500
Weekly	26	$1,211.54	about $31,500

The total is the same. What changes is how often money leaves your account and how much each time. For a full comparison, see daily vs. weekly merchant cash advance payments.

Method 3: holdback-based (split-funding) remittances

With split funding, you do not have a fixed payment. A percentage of your card sales goes to the funding partner until the purchased amount is remitted. Here you calculate the expected term instead.

Step 1: Estimate the remittance per period

Remittance = card sales x holdback percentage

If daily card sales average $1,500 and the holdback is 12%: $1,500 x 0.12 = $180 per day.

Step 2: Divide the purchased amount by that remittance

$31,500 / $180 = 175 business days, or about 8.3 months.

Monthly version

If monthly card sales average $40,000 and the holdback is 10%:

• Monthly remittance: $40,000 x 0.10 = $4,000
• Expected term: $31,500 / $4,000 = about 7.9 months

What if sales change?

Average monthly card sales	Remitted at 10%	Expected term for $31,500
$30,000	$3,000	10.5 months
$40,000	$4,000	about 7.9 months
$50,000	$5,000	6.3 months

The purchased amount never changes. Only the timeline moves.

Check the implied holdback on a fixed payment

Even with a fixed daily ACH, it helps to know what share of your revenue it takes.

Implied holdback = monthly remittance / monthly revenue

If the business deposits about $55,000 a month and the daily remittance is $250 (about $5,250 a month): $5,250 / $55,000 = about 9.5%.

If your revenue drops to $40,000 a month, the same fixed remittance becomes about 13% of revenue. That is when the reconciliation terms in your agreement matter. See merchant cash advance reconciliation.

How fees change the math

Up-front fees usually do not change your remittance, because the remittance is based on the purchased amount. They change how much cash you receive.

Example. A 2% origination fee on the $25,000 advance is $500. You receive $24,500 but still remit $31,500.

• Total cost: $31,500 - $24,500 = $7,000
• Effective multiple: $31,500 / $24,500 = about 1.29 (versus 1.26 on paper)

Read more in merchant cash advance fees.

Working backward: find the factor rate from an offer

Sometimes an offer lists the payment and term but not the factor rate. You can find it:

1. Remittance x number of remittances = purchased amount: $250 x 126 = $31,500
2. Purchased amount / advance = factor rate: $31,500 / $25,000 = 1.26

If you want to translate this into an annualized figure for comparison with a loan, our guide on factor rate vs. interest rate and APR shows how to estimate it honestly.

Quick formula sheet

• Purchased amount = advance x factor rate
• Cost of capital = purchased amount - advance
• Daily remittance = purchased amount / business days in term
• Weekly remittance = purchased amount / weeks in term
• Split-funding term = purchased amount / (sales per period x holdback)
• Implied holdback = monthly remittance / monthly revenue
• Net funding = advance - up-front fees
• Total cost = purchased amount - net funding

Checklist: before you trust the numbers

• Confirm the purchased amount in dollars in the agreement.
• Confirm whether remittances are daily, weekly, or a percentage of sales.
• Confirm which days count (business days only? bank holidays?).
• Check the implied holdback against your slowest recent month, not just your average.
• Compare net funding, not just the advance amount.
• Ask how reconciliation works if revenue drops.

Tnufa is an independent funding advisor; Tnufa’s funding partners set the terms and approve each offer. When you have more than one offer, these formulas let you compare them on the same basis. Learn more on our merchant cash advance page.

The bottom line

To calculate merchant cash advance payments, find the purchased amount (advance x factor rate) and divide by the number of remittances, or, for split funding, divide by your expected sales times the holdback. Then check the daily cost, the implied holdback, and the effect of fees so you know exactly what you are taking on.

Want to see what you qualify for? Check your options. Applying with Tnufa doesn’t affect your personal credit score.

Quick answers

How do you calculate a merchant cash advance payment?

Multiply the advance by the factor rate to get the purchased amount, then divide by the number of scheduled remittances. For example, $25,000 x 1.26 = $31,500, and $31,500 / 126 business days = $250 per day.

How many business days are in an MCA term?

A common rule of thumb is about 21 business days per month, so roughly 63 for three months, 126 for six months, and 252 for twelve months. Your agreement defines the actual schedule.

How do I calculate the term of a split-funding MCA?

Divide the purchased amount by the expected remittance per period. If 10% of $40,000 in monthly card sales is $4,000, a $31,500 purchased amount would take about 7.9 months to remit.

How do I find the factor rate from my payment?

Multiply the remittance by the number of remittances to get the purchased amount, then divide by the advance. $250 x 126 = $31,500, and $31,500 / $25,000 = 1.26.

Do fees change my MCA payment?

Up-front fees usually do not change the remittance, because it is based on the purchased amount. They reduce the cash you receive, which raises your effective cost.

This article is for general educational purposes only and is not legal, tax or financial advice. Terms, pricing and eligibility are set by funding partners and vary by business and state. Tnufa Finance is not a lender.