How to Read a Merchant Cash Advance Offer: Factor Rate, Holdback and Total Payback
By Charles Legacy, Legacy Loan Brokers
Published October 5, 2026
A merchant cash advance offer can look simple: one number you get, one number you pay back. The details in between decide whether the deal works for your business. Here's how to read one line by line before you sign anything.
A merchant cash advance offer can look simple: one number you get, one number you pay back. The details in between decide whether the deal works for your business. Here's how to read one line by line before you sign anything.
The four numbers that matter
1. The advance amount. This is the headline number, the funds the provider is buying your future sales for.
2. What actually lands in your account. Fees taken out at funding (origination, underwriting, or similar) shrink what you receive. Always compare offers on the money you actually get, not the headline.
3. The factor rate and total payback. An MCA usually isn't priced with an interest rate. It's priced with a factor rate. Multiply the advance by the factor rate and you get the total payback, the full amount you'll repay.
4. The total dollar cost. Total payback minus the money you actually received. This is the clearest single number for comparing offers.
A worked example (hypothetical numbers only)
These numbers are made up to show the math. They are not a quote and not a "typical" rate.
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Advance: $50,000
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Factor rate: 1.35
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Total payback: $50,000 × 1.35 = $67,500
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Fees deducted at funding: $1,500
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Money in your account: $48,500
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Total dollar cost: $67,500 − $48,500 = $19,000
How you pay it back: holdback vs. fixed payments
Offers usually collect payback one of two ways:
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A holdback (a percentage of sales). The provider takes a set percentage of your card sales or deposits. Slow week, smaller payment; busy week, bigger one. In the hypothetical above, a 10% holdback on $3,000 a day in sales is $300 a day, so $67,500 would take about 225 business days to repay.
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Fixed daily or weekly debits. The same ACH amount comes out on a schedule regardless of sales. Easier to plan around, harder on a slow month.
If payments are fixed, ask whether there's a reconciliation process, meaning a way to adjust payments when your sales drop. Get the answer in writing.
Questions to ask before you sign
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What exactly is deducted at funding, and what will I actually receive?
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What's the total payback, and how is each payment calculated?
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Is there any discount if I pay it off early? (Since the cost is set up front, early payoff doesn't always save money.)
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Can payments be adjusted if my sales fall?
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Does this offer require paying off or sitting behind another advance I already have?
Florida and Georgia require a written cost disclosure
Both states passed commercial financing disclosure laws that apply to deals made on or after January 1, 2024, generally for transactions of $500,000 or less. Covered providers have to give you a written disclosure showing, among other things:
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the total amount of funds provided, and what's disbursed after any fees are taken out,
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the total amount you'll pay the provider,
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the total dollar cost,
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how often and how much you'll pay (or, if it varies, an estimated first payment and how the amount is figured), and
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whether there are any costs or discounts for paying early.
Florida's law is in Florida Statutes sections 559.961–559.9615. Georgia's is Senate Bill 90 (2023), in Georgia Code section 10-1-393.18. Georgia's law also bars brokers from charging businesses an advance fee for brokering services. If an offer doesn't come with the disclosure, ask for it. This is general information, not legal advice.
Where Legacy Loan Brokers fits
We're a broker, not a lender. We help Florida and Georgia businesses compare working-capital and MCA offers from funding partners, and the partner makes the credit decision and provides the required disclosure. Our first step is a soft pull, so looking won't hurt your credit.
Legacy Loan Brokers is a business-funding broker, not the lender. We review files for Florida, Georgia, and online. Funding is placed with third-party partners and is subject to their review. Checking options uses a soft inquiry and does not hard-pull your credit. We do not publish a street address on this site.