What does an advance repaid from sales really cost?
Turn a factor rate or flat fee, repaid as a share of your sales, into an APR-equivalent and a total in pounds, at the level of sales you expect.
A merchant cash advance and revenue-based finance work the same way. The provider pays you a lump sum and fixes the total you repay up front: the advance multiplied by a factor rate, or the advance plus a flat fee. Then it takes an agreed share of your card sales or revenue, each day, week or month, until that total is paid.
The total never changes, but the time it takes does. If your sales are strong you repay quickly, and paying the same fee for a shorter time makes the money more expensive. This calculator works out every repayment at your level of sales, then finds the APR-equivalent in the same way as the true cost of a loan, so you can compare the two.
Results
- Cash you receive
- £20,000
- Total you repay
- £24,000
- Provider's fee
- £4,000
| Sales a month | Time to repay | APR-equivalent |
|---|---|---|
| £18,750Sales 25% lower | 12.8 months | 42.2% |
| £25,000Your sales | 9.6 months | 59.8% |
| £31,250Sales 25% higher | 7.7 months | 79.6% |
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Worked example: A £20,000 advance at a factor rate of 1.2, repaid from 10% of card sales
A made-up example, not a quote from any provider. Card sales are £25,000 a month and repayments are taken daily. You repay £24,000 in total.
- Advance
- £20,000
- Total repayable: £20,000 × 1.2
- £24,000
- Provider's fee
- £4,000
- Repayment a day: 10% of sales
- £82.19
- Time to repay
- 9.6 months (292 repayments)
- APR-equivalent
- 59.8%
If sales were 25% higher, the same £4,000 fee would be paid off in 7.7 months, and the APR-equivalent would rise to 79.6%. The price you agreed does not change; only how long you have the money does.
Worth knowing
- The fee is fixed, so repaying sooner does not save money. Repaying faster raises the APR-equivalent, because you pay the same fee for having the money for less time.
- The British Business Bank says a typical deduction is around 10% of each card sale, and repayment usually takes three to 18 months.
- If your sales fall, repayments fall too, but you pay for longer. If they rise, you pay off sooner at a higher APR-equivalent. The table shows both.
- A merchant cash advance is repaid from card sales, so steering customers to pay in cash can breach its terms. Check the contract for this, and for fees on missed or late collections.
Routes this works for
Sources
- British Business Bank: Small business owners guide to a merchant cash advance · checked 8 October 2026
- Wayflyer: Revenue-based financing: how it works, costs and examples (provider's own guide) · checked 8 October 2026
- FCA Handbook, CONC App 1.2: calculation of the annual percentage rate of charge · checked 8 October 2026