You applied for a merchant cash advance. An offer just arrived. There is a factor rate, a holdback percentage, a term, a total repayment amount, and a daily payment number — and nobody explained what any of it means.
This guide breaks down every number in an MCA offer so you can evaluate it clearly and make a decision that is right for your business — not your broker's commission.
Every legitimate MCA offer will contain these six figures. If any are missing, ask for them before you sign anything.
| Term | What It Means | Example |
|---|---|---|
| Advance Amount | The cash you receive upfront | $50,000 |
| Factor Rate | The multiplier that sets your total repayment | 1.30 |
| Total Repayment | Advance x Factor Rate — what you pay back in full | $65,000 |
| Holdback % | Daily percentage of your deposits applied to repayment | 15% |
| Term Length | Estimated business days to pay off the advance | 130 days |
| Daily Payment | Estimated amount debited from your account each business day | $500/day |
The factor rate is the single most important number in an MCA offer — and the most misunderstood. It is not an interest rate. It does not behave like one. It does not decrease as you pay down the balance.
The formula is simple:
A factor rate of 1.30 on a $50,000 advance means you repay $65,000 total — no matter how fast or slow you pay it back. That $15,000 cost is fixed from day one.
| Factor Rate | Advance | Total Repayment | Total Cost | Rating |
|---|---|---|---|---|
| 1.10 – 1.19 | $50,000 | $55,000 – $59,500 | $5,000 – $9,500 | Excellent |
| 1.20 – 1.29 | $50,000 | $60,000 – $64,500 | $10,000 – $14,500 | Good |
| 1.30 – 1.39 | $50,000 | $65,000 – $69,500 | $15,000 – $19,500 | Average |
| 1.40 – 1.49 | $50,000 | $70,000 – $74,500 | $20,000 – $24,500 | High — review carefully |
| 1.50+ | $50,000 | $75,000+ | $25,000+ | Very high — proceed with caution |
Important: Factor rates are determined by your risk profile — specifically your cash flow consistency, average daily balance, NSF history, and number of existing open advances. The cleaner your bank statements, the lower your factor rate.
The holdback is the percentage of your daily bank deposits that automatically goes toward repaying the advance. If your holdback is 15% and you deposit $4,000 one day, $600 is deducted automatically. If you deposit $10,000, $1,500 is deducted.
This is what makes MCAs different from loans. Your payment is not fixed — it moves with your revenue. A slow week means smaller repayments. A strong week means larger ones. In theory, this protects your cash flow during slow periods.
How to evaluate your holdback:
Most MCA offers also show a fixed estimated daily payment. This is calculated by dividing the total repayment by the term length in business days.
For example: $65,000 total repayment over 130 business days equals $500 per day, five days a week.
Over a month (about 22 business days), that is $11,000 coming out of your account. Make sure your average monthly revenue can comfortably absorb that before you sign.
Here is something most brokers never explain: a lower factor rate with a shorter term can be harder on your business than a slightly higher rate with a longer term — because the daily payment is larger.
| Offer | Advance | Factor Rate | Term | Total Cost | Daily Payment |
|---|---|---|---|---|---|
| Offer A | $50,000 | 1.22 | 90 days | $11,000 | $678/day |
| Offer B | $50,000 | 1.30 | 150 days | $15,000 | $433/day |
Offer A costs less total but takes $678 out of your account every business day. Offer B costs more in total but the daily payment is $245 lower — which may be easier to manage depending on your revenue. Always look at both the total cost and the daily payment together.
At AI MCA Exchange, every offer in your portal shows all six numbers side by side in plain English — advance amount, factor rate, total repayment, holdback, term, and daily payment. No guessing. No surprises after you sign.
Missing numbers. A legitimate offer will always show you the factor rate, total repayment, and holdback. If any of these are missing or vague, ask before you sign.
Pressure to decide quickly. No legitimate lender needs you to sign within hours. If someone is rushing you, that is a tactic — not a real deadline.
Stacking. If a lender offers you a second or third advance on top of existing ones without reviewing your current positions, that is a serious warning sign. Multiple advances stacked together can push holdbacks over 50% and collapse your cash flow.
Confusing terms. If you read the contract and do not understand what you are signing, that is a problem with the offer — not with you. Every term should be explainable in plain English.
Our portal shows every MCA offer with all six numbers in plain language. No broker. No hidden terms. You choose what works for your business.
Apply Free at mcaexchange.ai