If your business needs a quick infusion of cash, you might be considering a merchant cash advance (MCA). It’s a simple way to get funding without taking out a loan. However, before you start the application process, you’ll want to use an MCA calculator to gain a clear understanding of what it’s going to cost you and how these costs may impact your business down the line.
Taking the time to evaluate your MCA upfront can help you make sure you’re choosing the best option for your business. An MCA calculator also makes it easy to compare merchant cash advance rates, so you can make informed financial decisions.
The Mechanics of an MCA
While a merchant cash advance provides business owners with a lump sum of cash, it’s not actually a loan. Instead, an MCA is a unique form of financing that exchanges upfront cash for a percentage of future credit and debit card sales.
Similar to a loan, the total cost of an MCA is more than the amount you receive. It’s also composed of fees that are calculated using a factor rate. Unlike interest rates, which accrue over time, factor rates give you a fixed total payback amount upfront. For example, if you take out a $10,000 MCA with a factor rate of 1.2, you’ll need to repay $12,000.
Repayments are made daily or weekly, typically through an agreed-upon percentage of your daily credit card sales. This means the amount you pay each day varies with your sales volume.
Benefits of Using an MCA Calculator
Since the costs and repayment structure of your MCA can directly impact your business cash flow, it’s critical to understand the details of an MCA offer before you apply. An MCA Calculator is a simple, practical tool that can give you the information you need upfront, eliminating any guesswork. Here are a few ways it helps:
- Clarity on Costs: You’ll see the total repayment amount upfront, based on your specific factor rate and advance amount.
- Cash Flow Management: See your daily or weekly payments, so you can understand how the MCA will fit into your ongoing expenses.
- Comparison Shopping: Input different merchant cash advance rates to compare various MCA offers.
Using an MCA calculator allows you to make informed decisions about the commitment you’re making and helps you make sure you’re getting the best merchant cash advance for your situation.
How to Use Zinch’s Merchant Cash Advance Calculator
Zinch’s Merchant Cash Advance Calculator is an easy-to-use tool that requires just a few simple inputs. Here’s how to use it effectively:
- Input your estimated monthly credit card sales: This is used to calculate both the total advance amount you qualify for and your estimated daily payments.
- Input your desired MCA term in months: This is the length of time you would like to take to repay your MCA. In other words, how long do you want to make daily or weekly payments?
- Input the MCA’s factor rate: This is the lender’s mark-up, which can vary depending on your business’s credit evaluation.
Understanding Your MCA Calculator’s Results
Once you’ve entered your data into Zinch’s MCA calculator, you’ll receive several key pieces of information. This includes:
- Advance Amount: The total amount of funds you can expect to receive upfront from your MCA provider. This is the capital you can use immediately for your business needs.
- Daily Payments: The estimated amount you’ll need to pay the MCA provider each day. This is typically withdrawn directly from your bank account or debited from your credit card processor before you receive the funds. Since this is directly tied to sales, the actual daily amount will vary with the ebb and flow of your business.
- Payback Amount: The total amount you’ll pay back over the term of your MCA.
- MCA Cost: The total cost of your MCA.
By understanding your merchant cash advance calculator outputs, you can make an informed choice about whether an MCA is the right financial choice for your current needs and future plans. Just keep in mind that the calculator outputs are estimates. Once you go through the underwriting process, your MCA provider will give you a detailed disclosure document that explains your actual costs and payments. Review this carefully before completing your final MCA agreement.
Explore Your MCA Options Today!
If you’re considering a merchant cash advance for your business funding needs, Zinch is here to help. Contact us at (714) 500-6622 to learn more about your options. You could qualify for up to $250,000 in just 24 hours.
