An advance is a purchase of future card sales, priced with a factor and collected through a daily holdback. The examples use invented figures; day counts round up, as the calculator on this page does.
At a glance
- What it is
A purchase of future card sales by a funding source
- How it is collected
A share of daily card sales, the holdback
- What sets the cost
The factor, fixed when the agreement is signed
An invented $22,000 advance at a Sevierville, TN barbecue restaurant: the factor, the 10% holdback and 120 business days
Illustration only, invented figures: a barbecue restaurant in Sevierville, TN takes a $22,000 advance with a 1.30 factor, so $28,600.00 is to be remitted. Card sales averaging $2,400 a day, held back at 10%, send roughly $240.00 to the provider per business day; 120 business days of that clears the total, counting a part day as a full one.
The restaurant is one of 186 full-service restaurants with a Sevier County, TN location in 2023 (County Business Patterns, NAICS 722511). For a restaurant with steady card sales, the question is whether the invented fixed cost of $6,600.00 on $22,000 is worth the flexibility of payments that follow sales.
What is a holdback rate? Card-sales days at a Sevier County, TN arcade, traced one by one
The holdback rate is the percentage of each day's card sales the provider keeps until the advance is collected. It does not change the total owed; it changes how many business days pass before that total is reached.
| Day | Card sales | Collected at 9% |
|---|---|---|
| Day 1 | $1,850 | $166.50 |
| Day 2 | $3,200 | $288.00 |
| Day 3 | $1,100 | $99.00 |
| Day 4 | $2,640 | $237.60 |
| Day 5 | $2,275 | $204.75 |
Over these five invented days the provider collects $995.85. On the low day it takes less, on the strong day more, which is the main difference from a fixed payment. With a percentage holdback, a day without card sales collects nothing; the agreement states what happens then.
How to calculate a factor rate in dollars: two advance offers for a Sevierville, TN outdoor outfitter
A factor is a multiplier. The amount to be remitted is the advance times the factor, and the cost is the advance times the factor minus one. Two offers for an outdoor outfitter in Sevierville, TN show the arithmetic.
| Offer | Total remitted | Cost of the advance | Business days to collect |
|---|---|---|---|
| 1.24 factor | $32,240.00 | $6,240.00 | 139 |
| 1.32 factor | $34,320.00 | $8,320.00 | 148 |
The 1.32 offer costs $2,080.00 more and takes about 9 more business days at the same holdback. The calculator on this page runs these four inputs for any offer.
Merchant cash advance or a credit line draw for a Sevier County, TN pizza kitchen replacing its dough mixer
A pizza kitchen in Sevier County, TN needs a new dough mixer at an invented price of $14,000 and can ask for a card-sales advance or draw on a business line of credit, if it has one.
| Route | How it is paid | Cost |
|---|---|---|
| Advance, 1.27 factor | Daily slices of card sales, stopping once the agreed total is in | $3,780.00 |
| Line draw, 13.6% | Four monthly payments of $3,599.73 | $398.92 of interest |
For the pizza kitchen, the advance comes out $3,381.08 dearer than the draw in this invented case. The line needs an open limit and fixed monthly amounts; the advance asks for steady card sales and collects whatever share of them the agreement sets. Any line fees belong in the comparison too.
How a merchant cash advance works at a Sevier County, TN nail salon, from offer sheet to final remittance
A nail salon in Sevier County, TN that takes most of its sales by card can follow one advance from start to finish:
- The owner calls (865) 326-1090 or sends the request form, and the amount and use are talked through on the call.
- Boldwick passes the request to funding partners; a provider may review several months of card-processing statements.
- The offer sheet names the amount, the factor, the total to be remitted and the holdback.
- After signing, the provider sends the money, and collection begins through the card processor or a daily bank debit, as the agreement sets.
Illustration only, invented figures: the salon takes $9,500 with a 1.35 factor, so $12,825.00 is to be remitted. At a 12% holdback on $1,300 of daily card sales, about $156.00 goes out each business day, and the final remittance comes after about 83 business days.
What is a factor rate in an MCA? Reading a Sevier County, TN tire shop's advance offer
A factor rate in an MCA is the price of the advance, written as a decimal such as 1.29. It is not an annual interest rate; the cost is set when the agreement is signed and does not grow with time. Card sales that clear the total early leave the cost where it was, unless the agreement spells out a discount.
| Line on the offer | Figure | What it means |
|---|---|---|
| Advance amount | $31,000 | Money sent to the shop |
| Factor | 1.29 | Multiplier on the advance |
| Total to be remitted | $39,990.00 | Advance times factor |
| Holdback | 9% | About $324.00 a day on $3,600 of card sales |
| Fees | Ask | Any fees on top of the factor |
The tire shop's $39,990.00 clears after about 124 business days of card sales at that holdback. The shop is one of 45 automotive repair and maintenance establishments in Sevier County, TN in 2023 (County Business Patterns, NAICS 8111).
Three articles put an advance next to other choices: a buffet line taken as an advance, an advance's cost day by day and the steps to working capital.
By Boldwick Funding Group ยท Updated
