Swiftpine Loans passes requests to funding sources, which review them and set any terms.
Buying a slice of future card sales is what a merchant cash advance provider does. The total collected equals the advance times the factor rate, and the daily share of card sales sets how long collection takes. The examples on this page are invented.
At a glance
- Limited-service restaurants, Robertson County, TN
57 employer establishments (County Business Patterns 2023, NAICS 722513)
- Auto repair and maintenance, Robertson County, TN
33 employer establishments (County Business Patterns 2023, NAICS 8111)
- Accommodation and food services, ZIP 37172
65 employer establishments (ZIP Code Business Patterns 2023)
Fixed daily debit or a true holdback: two ways a Springfield, TN quick-service restaurant’s advance can be collected
Some advances take a set percentage of each day’s card batch, so a slow day sends less and a strong day sends more. Others debit the same dollar amount from the bank account each business day, whatever the sales were, and may allow an adjustment later if sales fall short. The contract says which one applies.
Illustration only, invented figures: with a 9% holdback, a quick-service restaurant sends $144.00 on a $1,600 card day and $216.00 on a $2,400 day. On a fixed debit of $180.00, both days send $180.00.
A restaurant whose card sales move a lot from one day to the next feels the difference most. It can ask the provider which method an offer uses and what records an adjustment request needs.
Robertson County, TN had 57 limited-service restaurant employer establishments in 2023 (County Business Patterns). Restaurants, retail stores and salons appear with Robertson County, TN counts on the industries page.
Factor rate math in three lines: the total a Robertson County, TN tire shop’s advance collects
- Total collected = advance × factor rate.
- Advance cost = the total collected minus the advance.
- Factor rate = total collected ÷ advance, if an offer shows only the dollar totals.
Illustration only, invented figures: a tire shop takes $21,000 at a 1.22 factor. That sends $25,620.00 to the provider, so the advance costs $4,620.00. The same three lines work backward: $25,620.00 ÷ $21,000 = 1.22.
Merchant cash advance vs line of credit for a Springfield, TN repair shop’s parts-supplier statement
A line of credit charges interest only on the amount drawn and for as long as it stays out; the cost falls when the balance is paid down early. An advance has one fixed cost set at signing, and collecting it sooner does not lower it.
| Point | Merchant cash advance | Line of credit draw |
|---|---|---|
| How the cost is set | 1.27 factor | 13.2% annual rate |
| How it is paid down | Share of daily card sales | 4 equal monthly payments of $3,853.69 |
| Total sent | $19,050.00 | $15,414.76 |
| Cost | $4,050.00 | $414.76 |
A line needs a limit approved ahead of time, which a funding partner may or may not grant; the advance is priced on card sales. The repair shop weighs the cost gap against which one it can get in time.
The line’s cost in this example assumes four equal monthly payments. Clearing the draw sooner would cut its interest further; collecting the advance sooner would not change its cost. A blog post follows one coffee bar’s advance through seven months of card sales and sets it against a 12-month term loan.
A Robertson County, TN pizza kitchen’s oven repair and the merchant cash advance behind it, from offer to final batch
- The kitchen describes the repair bill and its card sales on a call; a funding source may ask for card processing statements.
- Each offer states three figures: the advance, its factor rate and the holdback.
- Once signed, the funds go into the kitchen’s bank account.
- The holdback comes out of each day’s card batch until the full total has been collected.
Illustration only, invented figures: a pizza kitchen takes $12,400 for an oven repair at a 1.31 factor and an 8.5% holdback, with card sales near $2,350 a business day. The provider is owed $16,244.00, takes about $199.75 a day, and reaches the total in about 82 business days. The calculator on this page runs the same steps from those four inputs.
Two factor rates, two offers: a Springfield, TN landscaping company that takes card payments compares MCA totals
For a landscaping company that takes card payments on its jobs, the factor rate is the number the advance is multiplied by to reach the total collected. It does not change with time, so the holdback decides how many business days collection lasts.
| Offer | Factor rate | Holdback | Total collected | Cost | Per day | Business days |
|---|---|---|---|---|---|---|
| Offer A | 1.19 | 10% | $21,420.00 | $3,420.00 | $190.00 | 113 |
| Offer B | 1.29 | 7% | $23,220.00 | $5,220.00 | $133.00 | 175 |
Offer A costs $1,800.00 less and finishes sooner, but takes $57.00 more out of each day’s sales. Offer B leaves more cash in the account each day.
A purchase of future card sales: the contract lines a Springfield, TN shop owner reads before signing
For card-taking shops, a merchant cash advance contract sells part of the shop’s future card receipts to the funding source, and it is not a loan. Before signing, find these lines:
- the advance amount and any fees taken out before it lands
- the factor rate and the total to be collected
- the holdback percentage or the fixed daily debit
- whether the daily amount can be adjusted if sales fall
- what an early payoff costs, if the contract allows one
Recent card processing statements show the daily sales an offer is built on. Running those sales and the holdback through the calculator on this page shows what an ordinary day sends and how many business days collection may take.
By Swiftpine Loans · Updated