Funding sources set the factor, the holdback and every other term.
Three numbers decide an advance: the sum, the factor (which fixes the total owed) and the holdback (which sets the daily share and so the number of days). The calculator on this page works all three; the figures in the examples are invented.
At a glance
- What it is
A purchase of future card sales by a funding source
- Priced by
A factor named in the offer, fixed at signing
- Collected
A set share of each business day's card sales
Card tickets versus insurance checks: the receipts an advance counts at an Anderson County, TX auto repair shop
The advance this site describes is collected from card sales alone, so cash, checks and bank transfers stay outside the daily share; an agreement that debits the bank account instead spells that out in its own terms.
Illustration only, invented figures: an Anderson County, TX auto repair shop deposits $78,000 in a month, and $41,000 of that comes from card payments; insurance checks and transfers make up the rest. A 10% holdback reaches only the card tickets, so it collects $4,100.00 that month and leaves the $37,000 of checks and transfers alone. In a month when more repair bills are settled by insurance check, the daily collection shrinks with the card share and the total takes longer to reach.
Auto repair and maintenance shops in Anderson County, TX had 161 paid employees and $8.1 million of annual payroll in 2023 (County Business Patterns, NAICS 8111).
Holdback rate in plain terms: the daily card-sales share at a Palestine, TX quick-service restaurant, set at 9% and at 14%
The holdback rate is the percentage of each business day's card sales the funding source keeps until the agreed total is reached. It does not change the total owed. It changes how soon the total is reached, and how much of each day's card money the business keeps.
| Holdback | Collected per business day | Business days to reach the total (rounded up) | Cost of the advance |
|---|---|---|---|
| 9% | $238.50 | 77 | $4,200.00 |
| 14% | $371.00 | 50 | $4,200.00 |
At 9%, the Palestine, TX quick-service restaurant in this invented case keeps $2,411.50 of an average card day; at 14%, it keeps $2,279.00. The cost is $4,200.00 either way.
County Business Patterns counted 29 limited-service restaurants with employees in Anderson County, TX in 2023; 23 of them had five or more employees (our arithmetic from the size classes).
Calculating a factor rate's dollar cost, offer sheet to total, for a Palestine, TX retailer comparing two quotes
A factor turns into dollars in two steps: multiply the advance by the factor to get the total remitted, then subtract the advance to get the cost. The same two steps put two quotes on one footing.
| Quote | Total remitted | Cost of the advance |
|---|---|---|
| A: a 1.36 factor | $30,600.00 | $8,100.00 |
| B: a 1.29 factor | $29,025.00 | $6,525.00 |
In this invented pair, quote B costs $1,575.00 less than quote A. If a fee is taken out of the sum before it is paid out, the business receives less than $22,500 but still remits the full total, so the real cost is the total minus the cash actually received.
Retail has the most establishments at ZIP 75801 addresses: ZIP Code Business Patterns lists 119 retail establishments there for 2023, 45.4% of them with fewer than five employees.
A 1.25 factor or a 14.2% credit line for an Anderson County, TX HVAC contractor's invented $9,400 van transmission bill
In an invented case, an Anderson County, TX HVAC contractor needs $9,400 for a service van's transmission. Two ways to pay for it price time in opposite ways: a credit line charges for each day the money is out, while an advance's cost is fixed at signing.
| Merchant cash advance | Line of credit draw | |
|---|---|---|
| Price | A 1.25 factor | 14.2% annual rate |
| Cost if cleared in 90 days | $2,350.00 | $329.13 (balance held the full 90 days) |
| Cost if cleared sooner | $2,350.00 | Less, because interest stops when the balance does |
A business line of credit needs to be in place before the bill arrives, and a funding partner reviews it like other credit. The advance is built on card sales, so it fits only a contractor that takes cards for a good share of its jobs.
Plumbing, heating and air-conditioning contractors in Anderson County, TX carried $4.7 million of annual payroll in 2023 (County Business Patterns, NAICS 238220).
How does a merchant cash advance work from signing to the final remittance? Five stages at a Palestine, TX sit-down restaurant
- Any offer names the sum, the factor and the holdback.
- The business signs the agreement, which also names the account the card settlements flow through.
- The funding source deposits the sum.
- On every business day after that, the agreed slice of the restaurant's card settlements is routed to the funding source.
- When the agreed total is reached, the collections stop.
Illustration only, invented figures: a Palestine, TX sit-down restaurant takes $26,000 at a 1.31 factor, so $34,060 is to be remitted. With a 13% holdback and $3,100 of average daily card sales, $403.00 goes out each business day, and the total is reached in about 85 business days (rounded up). The calculator on this page gives the same figures from those four inputs.
County Business Patterns lists 34 full-service restaurants with employees in Anderson County, TX for 2023, with $12.7 million of annual payroll.
What is a factor rate in an MCA, and why clearing the total sooner leaves the cost unchanged for a Palestine, TX physician office
A factor rate in an MCA is a multiplier, such as 1.24, applied once to the advance. It is not a yearly percentage, and it does not shrink with time: the total is set at signing, whether the card sales reach it in two months or in six.
Illustration only, invented figures: a Palestine, TX physician office that takes card payments for visits accepts $12,000 at a 1.24 factor and has $14,880 to remit. If card sales are strong and the total is reached in 60 business days, the cost is $2,880. If they are slow and it takes 120, the cost is still $2,880. An early-clearing discount exists only if the agreement spells one out.
Offices of physicians in Anderson County, TX had 254 paid employees and $33 million of annual payroll in 2023 (County Business Patterns, NAICS 6211).
Two blog posts set an advance's dollar cost beside other funding: a restaurant's holding cabinet replacement and comparing offers on total cost.
By Eaglerock Business Capital · Updated
