Funding partners decide whether to make an offer.
An advance buys a slice of future card receipts. This page shows what that means for a salon, turns a factor into dollars for a restaurant, sets an advance beside a credit line draw, lists the steps, compares three factors and shows how the holdback sets the pace. Every figure is invented.
At a glance
- Priced by
A factor fixed at signing, not an annual rate
- Collected as
A holdback share of daily card sales
- What is sold
A share of future card receipts
The site's one revenue-based option: a merchant cash advance at an Edmond, OK salon
Of the six funding types on this site, the merchant cash advance is the only one whose cost is tied to sales rather than to a rate and a schedule. A salon that takes most of its payments by card sells a share of those future card receipts to a funding source for a sum today.
Three numbers define the deal: the advance amount, the factor that sets the total the salon will deliver, and the holdback, which is the share of each day's card sales sent to the funding source. On a slow day less goes out; on a full day more does. The total stays the same either way.
Because the arrangement is a purchase of receipts, the salon owes nothing extra for taking longer to deliver the total, and under a fixed factor gets no discount for delivering it sooner unless the agreement provides one.
How to work out what a factor rate costs in dollars: kitchen payroll at an Edmond, OK sit-down restaurant
The dollar cost is the advance times the factor, minus the advance itself. In this invented case a sit-down restaurant takes $21,500 to cover kitchen payroll while a large equipment repair is being paid; with a 1.31 factor, the restaurant delivers $28,165.00 in all, so the advance costs $6,665.00.
With a 9% holdback and average card sales of $2,965 a day, about $266.85 goes to the funding source each business day, and the total is delivered in about 106 business days (our arithmetic, rounded up as the calculator does).
Full-service restaurants with paid staff numbered 806 in Oklahoma County, OK in 2023 (County Business Patterns, NAICS 722511). The calculator on this page takes the same four inputs: advance, factor, holdback and daily card sales.
Merchant cash advance vs a line of credit for a repair bill at an Oklahoma County, OK fitness studio
In this invented case, a fitness studio needs $7,600 for treadmill motor repairs. Two ways to cover it give very different cost shapes.
| Option | How the cost works | Cost in this case |
|---|---|---|
| Cash advance | 1.22 factor; cost fixed at signing | $1,672.00 |
| Line of credit draw | 13.6% a year, simple interest, paid off after 47 days | $133.09 |
The draw's interest grows with every day the balance is out; the advance's cost does not change. In this invented case the draw would have to stay out about 591 days before its interest reached the advance's fixed $1,672.00. A studio without an open line, or with uneven card sales it would rather pay against, may still weigh the advance; the line of credit page shows how draws work.
Reformers, assault bikes and a portable studio sound system on equipment loans are covered on the gym business loans page.
How does a merchant cash advance work, step by step, for an Oklahoma County, OK therapy office facing a tax bill?
- The therapy office calls or sends a request with the tax amount and its card-sales history
- A funding source may review recent card processing statements and bank statements
- Any offer names the advance, the factor, the holdback and how receipts are counted
- After signing, the office receives the advance and pays the tax bill
- Each business day, the holdback share of card receipts goes to the funding source until the agreed total is delivered
Patient copays and self-pay visits paid by card are the receipts the holdback draws on. Insurance claim payments that arrive by check or transfer are not card receipts, so they do not move the total along; how the agreement defines receipts is worth reading before signing.
What is a factor rate in an MCA? Three factors on one advance for an Edmond, OK physician office with claims pending
The factor is a multiplier written into the offer, such as 1.18 or 1.35. It is not an annual rate: it does not grow with time, and it is not charged on a falling balance. A physician office waiting on insurance claims can compare offers by turning each factor into dollars.
| Factor | Total remitted | Cost of the advance |
|---|---|---|
| 1.18 factor | $18,880.00 | $2,880.00 |
| 1.26 factor | $20,160.00 | $4,160.00 |
| 1.35 factor | $21,600.00 | $5,600.00 |
Because the cost is fixed, the same factor costs the office the same dollars whether its card receipts deliver the total in three months or six. A slower claim cycle changes neither the factor nor the dollar cost.
What is a holdback rate? Busy and slow card days at an Edmond, OK auto repair shop
Holdback names the cut of every day's card takings that the shop forwards to the funding source. In this invented case an auto repair shop takes $18,400 at a 1.28 factor, so it will deliver $23,552.00. Average card sales are $2,650 a day.
| Holdback | Per average day | Business days to deliver the total |
|---|---|---|
| 8% | $212.00 | 112 |
| 12% | $318.00 | 75 |
At 8%, a $1,900 card day sends $152.00 and a $4,300 day sends $344.00. A higher holdback finishes sooner but takes a bigger bite out of each day's card sales. Auto repair and maintenance establishments with paid staff numbered 443 in Oklahoma County, OK in 2023, and 20 had a ZIP 73003 address (County Business Patterns and ZIP Code Business Patterns, NAICS 8111). The other five funding types are on the business loans overview.
The equipment side of a repair shop, from a rotary screw compressor to an ADAS calibration rig, is priced on the auto repair shop loans page.
A nail salon post follows a card-sales advance through an uneven week.
By Skywater Business Funding ยท Updated
