Business Funding · 6 min read
How much does a merchant cash advance cost? Worked example
A merchant cash advance costs a fixed fee, set as a factor of the amount advanced. iwoca puts that factor typically between 1.2 and 1.5, so £15,000 advanced means £18,000 to £22,500 repaid. The fee is agreed at the start, does not fall if you repay quickly, and at the providers we checked does not rise if you repay slowly. The number to compare between offers is the total repayable in pounds.
How the factor works
Multiply the advance by the factor and you have the total repayable. There is no interest accruing day by day. iwoca describes the business paying a set percentage of its card sales to the lender until it has repaid the initial amount plus the factor fee. The percentage of sales, often called the holdback or split, decides how fast the total is cleared, not how large it is. Our factor rate explained page goes deeper on the mechanism.
A published example
The Business Expert review of YouLend, published this month, gives one worked example: £15,000 funded, £1,500 fee, £16,500 repaid, collected at 20% of daily card sales. That is a factor of 1.1, below the range iwoca describes as typical, and the review is careful to call it one example for a business with a particular trading record. It is useful because it shows the shape of the deal in pounds rather than percentages.
On that example, a business taking £5,000 a week by card would see £1,000 a week deducted and clear the £16,500 in roughly 17 weeks. A business taking £2,500 a week would see £500 deducted and take roughly 33 weeks. The fee is £1,500 in both cases.
The same £15,000 across the typical range
| Factor | Advance | Fee | Total repayable | Weeks at £1,000 a week deducted |
|---|---|---|---|---|
| 1.1 (YouLend example) | £15,000 | £1,500 | £16,500 | About 17 |
| 1.2 | £15,000 | £3,000 | £18,000 | 18 |
| 1.35 | £15,000 | £5,250 | £20,250 | About 20 |
| 1.5 | £15,000 | £7,500 | £22,500 | About 23 |
The factor range is iwoca's published typical range; the arithmetic is ours and is an illustration, not a quote. The weeks column assumes a steady £1,000 a week deduction, which real card takings never quite deliver. The MCA cost calculator lets you put in your own numbers.
Why APR is the wrong yardstick
APR builds time into the cost. A factor does not. Take the £1,500 fee on £15,000. If takings are strong and the advance clears in five months, that fee bought five months of money. If takings are slow and it takes ten months, the same fee bought ten months of money, and the annualised cost is roughly half. Same pounds, very different APR. That is why providers do not generally quote one, and why we do not print one here. The comparison that works is total repayable against total repayable, and then a realistic estimate of how long each is likely to take. Our factor rate vs APR page sets the two side by side.
Early, late and in arrears
Early repayment does not reduce the fee. iwoca is direct about it: you cannot save yourself money by repaying early, and at some providers early settlement may incur a charge. YouLend fixes the fee in pounds at signing. Capify has been reported as treating early repayment as shortening the term rather than cutting the total, with its early-settlement clause not published.
Slow repayment, at the providers we checked, does not add cost. 365 Finance states there is no fixed term and no additional charges if the advance takes longer to repay than expected. Arrears are a separate matter from slow trading: Business Expert notes that YouLend's terms allow collection costs to be recovered if payments fall into arrears. The agreement sets out what counts as arrears, and businesses commonly read that clause before the rate.
Questions that change the total
The factor is the headline, but a handful of other terms decide what the advance costs in practice. These are the points businesses commonly ask about before signing.
- The total repayable in pounds, written down, rather than a factor or a percentage on its own.
- The holdback percentage, and whether the provider can change it during the term.
- Any set-up, administration or platform fee deducted from the advance before it lands.
- What the agreement treats as arrears, and what charges follow.
- Whether early settlement carries a charge, or simply shortens the term.
- Whether a personal guarantee is required, and what it covers.
Two offers with the same factor can come out differently once those lines are added, which is why the comparison is done on the final figure in pounds and on the agreement itself, not on the quote.
When the cost is not worth paying
A factor of 1.2 to 1.5 is a fixed fee for short-term money. A term loan is priced on interest over a fixed term, so the total repayable can differ a great deal from an advance; compare the total repayable on each offer rather than assuming either is cheaper. A business with filed accounts, a year or more of trading and a planned purchase commonly compares a term loan; a business buying equipment commonly compares asset finance. The advance earns its fee when the need is short, the card takings are steady, and the flex in repayment is worth more to the business than the difference in cost. The fuller breakdown is on our MCA cost page.
None of the factors above is ours to set. CapExpand is an introducer: we connect UK limited companies and LLPs with providers, and the provider sets the factor and makes the decision.
Frequently asked questions
What is a typical factor rate on a merchant cash advance?
iwoca puts it typically between 1.2 and 1.5. On £15,000 that is a total repayable of £18,000 to £22,500. The factor an individual business is offered depends on its trading record and is set by the provider.
Does repaying early reduce the cost?
Generally no. iwoca says you cannot save money by repaying early, and YouLend fixes the fee in pounds at signing so early repayment does not reduce the total. iwoca also notes an early repayment charge may apply at some providers. Capify has been reported as treating early repayment as shortening the term rather than the total.
Does repaying slowly cost more?
At the providers we checked, no. 365 Finance states there is no fixed term and no additional charge if the advance takes longer to repay. Arrears are different: Business Expert notes YouLend's terms allow collection costs to be recovered if payments fall into arrears.
What is the APR of a merchant cash advance?
Providers do not generally quote one, because the fee is fixed and the repayment period is not. The same £1,500 fee on £15,000 annualises very differently over five months than over ten. We do not print an APR figure for that reason; the total repayable is the number to compare.
Are there fees on top of the factor?
The factor fee is the headline cost at the providers we checked. Whether there are set-up, late or early-settlement charges varies by provider and is set out in the agreement. Businesses commonly ask for the total repayable in pounds and any other charge in writing before signing.
Sources (checked August 2026)
Get the total repayable in pounds, not a percentage
CapExpand introduces UK limited companies and LLPs to funding providers and lays out each offer as a total repayable. Phone 0333 041 3127 with your figures, or use the two-minute form.
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CapExpand Ltd (Company No. 14433858) is a commercial finance introducer, not a lender. We are not currently authorised or regulated by the Financial Conduct Authority and do not provide financial advice. All information on this page is for educational purposes only. Funding is subject to status and lender criteria. CapExpand will receive a commission from providers at no extra cost to you.