MCA vs. Loan Cost Comparison
See the true cost of a cash advance versus a real loan.
A cash advance repays amount × factor rate regardless of term. A real loan charges interest only on the balance — usually far less.
How this calculator works
The two sides of this calculator price money differently, and that's the whole point. A merchant cash advance uses a factor, not an interest rate. You multiply the advance by the factor to get the payback, and that payback is fixed no matter how quickly it's collected. The MCA cost is simply the payback minus the amount advanced.
The MCA weekly drain spreads that payback across the term you enter, at about 4.33 weeks per month. Many advances actually debit every business day, so the real rhythm can feel even tighter than a weekly number suggests.
The loan side uses standard amortization: interest is charged only on the balance you still owe, and that balance shrinks with every payment. Loan total interest is the sum of all payments minus the amount borrowed. The savings line is the MCA cost minus the loan interest.
How to read your result
| You could save with a loan | The gap between the two costs on the inputs you entered. If it shows $0, the loan inputs cost as much as the advance or more, so double-check the term and pricing on each side. |
|---|---|
| MCA total cost | What the advance costs in dollars, start to finish. Because it's fixed up front, paying early usually doesn't shrink it. |
| MCA weekly drain | How much leaves your account each week. Compare it with your slowest week, because the debit doesn't slow down when sales do. |
| Loan total interest and weekly payment | The loan's cost and payment on the same weekly basis, so the two can be compared line for line. |
What lenders look at when you're replacing an advance
If the comparison makes the case for a real loan, a lender will still want to understand your file. These questions come up most often when an owner is trying to get out from under a cash advance.
Payment history
Lenders read your bank statements and look at how the advance debits are landing. A clean, steady history helps.
Number of positions
One advance is a very different conversation from three stacked ones. Stacking squeezes cash flow and narrows the options.
Revenue consistency
A steady deposit pattern shows a lender that a fixed payment is realistic for the business.
Remaining balance
What's left to pay on the advance, not the original amount, is what a replacement loan has to cover.
Time in business and credit
The same basics as any business loan still apply, and they decide which programs are open to you.
Room to operate
A refinance that lowers the drain and leaves the business breathing room is easier to support than one that just resets the clock.
A worked example
Take an example advance of $100,000 with a 1.35 factor. The payback is $135,000, so the advance costs $35,000 no matter how the debits are scheduled.
Spread over 9 months, that's about 39 weeks, or roughly $3,464 leaving the account every week ($135,000 ÷ 38.97).
On the loan side, enter the pricing and term from a real quote. Because a loan charges interest only on what you still owe, and that balance shrinks each month, the total cost is often far lower. A longer term brings the weekly payment down too.
Common questions
What is a factor rate?
A merchant cash advance is priced with a factor rate (e.g., 1.35), not an interest rate. You repay the amount times the factor — so $100,000 at 1.35 means repaying $135,000 regardless of how fast.
Why is an MCA usually more expensive?
Factor-rate pricing plus a short term and daily/weekly debits typically work out to a much higher effective cost than an amortizing loan at a stated interest rate.
Can I convert a factor to an APR?
Roughly, but the answer depends on how fast the advance is collected. The shorter the term, the higher the effective annual cost for the same factor. That's why this calculator compares total dollars and weekly drain instead of forcing the two onto one number.
Why doesn't paying an advance off early save money?
Because the payback is set up front as the advance times the factor. Unlike a loan, there's usually no interest building on a balance that an early payment would reduce. Some funders offer an early-payoff discount; if yours does, get it in writing.
Can a business loan pay off a merchant cash advance?
Often, yes. Replacing one or more advances with a fixed-payment loan is a big part of why Capco Capital exists. Whether it works depends on your revenue, your payment history and how many advances are open.
Your next step
If the numbers point toward a way out, start with how a payoff works, or read the full MCA vs. business loan breakdown.
MCA payoff
How owners replace daily debits with one fixed, predictable payment.
Learn more →Working capital
Real working-capital financing with a set term and a set payment.
Learn more →Capital Position Report
See how a lender will read your file before you apply anywhere.
Learn more →Checking your options takes about 2 minutes, doesn't affect your credit, and carries no obligation. Capco Capital is a commercial lending advisory firm operated by Capco Capital LLC. We arrange financing through third-party lenders as a loan broker and are compensated by the lender when a loan funds. We are not a lender and are not affiliated with the U.S. Small Business Administration.
Like the numbers? Let's make them real.
Check your options in two minutes with no credit pull and no obligation, or call (337) 270-2036.
