What a merchant cash advance actually costs
One fixed fee, agreed upfront, no compounding interest. That's the headline. The small print is that the fee varies a lot between lenders for the same business, and repaying early usually doesn't save you a penny. Here are the real numbers.
The maths in one line
Advance amount multiplied by the factor rate equals the total you repay. UK factor rates in 2026 typically sit between 1.1 and 1.5. Here's what that looks like in pounds:
| Advance | Factor rate | Total repayable | Cost to you |
|---|---|---|---|
| £10,000 | 1.2 | £12,000 | £2,000 |
| £30,000 | 1.25 | £37,500 | £7,500 |
| £50,000 | 1.3 | £65,000 | £15,000 |
| £100,000 | 1.35 | £135,000 | £35,000 |
Illustrations only, not offers. Rates depend on the lender and your business profile, and we do not provide financial advice. Want your own numbers? The MCA cost calculator takes about a minute.
What decides whether you pay 1.2 or 1.4
Two businesses borrowing the same amount can be quoted very different rates, and the same business can get different rates from different lenders in the same week. The things that move the number:
Monthly card turnover
The single biggest lever. Strong, steady card sales mean predictable repayments, and lenders price that as lower risk.
Time trading
Twelve months or more of history usually beats six. Lenders want to see you through at least one quiet season.
Your sector
Hospitality and retail tend to price well because card volume is consistent and lenders know the patterns.
Repeat funding
Repaid an advance before? Most lenders will sharpen their pencil the second time around.
Which lender sees your file
This is the part a broker or introducer earns their keep on. We put your case to the lenders on our panel most likely to price it well, rather than you taking the first quote that lands.
When an MCA is the expensive option
We introduce businesses to these products every week, and the numbers speak for themselves: measured over a full year, an MCA usually costs more in pounds than a decent term loan. If your card takings are strong, you can wait a week or two, and total cost matters most to you, a fixed-rate term loan is often cheaper over the year. We can introduce you to term-loan lenders on our panel too, so you can compare both.
Where the MCA earns its fee is speed and flexibility. The money can land within days, the total cost never grows, and repayments come off as a small percentage of card sales, so a quiet January doesn't put you under pressure. Tom, who runs a bistro in Manchester, put it like this:
“Repayments would come as a small percentage of our card takings, so in January when it's quiet, we'd pay less. That was the bit that made sense.”
Tom M. · Bistro, Manchester · read his story
Weighing the two? The advance and a term loan are set out side by side, feature by feature, on the merchant cash advance page.
The cost, in context
A factor rate turns into an annual cost only when you fix the repayment period, which an advance never does. Take a £30,000 advance at a 1.25 factor rate: the total is £37,500 and the cost is £7,500, or 25% of the advance. Repaid over six months that is a simple annualised equivalent of roughly 50%; over twelve months about 25%; over sixteen about 19%. The agreement is identical in all three cases. Only the calendar changed.
That is why repaying an advance early does not save money. On a loan, interest stops when the balance does. On an advance the cost was fixed at signature, so a fast repayment simply raises the effective annual rate. Ask what the settlement figure would be after six months and compare it to the full £37,500 before assuming there is a discount.
Put it next to the same money as a term loan and the comparison becomes concrete. At £25,000 unsecured, 36 lenders on our panel have a product covering the amount over terms of 1 to 72 months, with published rate floors from 4.1%, a median floor of 19.2% and ceilings reaching 70.8% (checked September 2026). At £50,000 it is 47 lenders with a 17% median floor.
Advances and those term loans sit on the same unsecured panel of 55 lenders (checked September 2026), so testing both costs one enquiry rather than two. Where card takings are strong and the need is genuinely short, the flexibility is worth paying for. Where they are not, the pounds usually answer it.
Two costs sit outside the factor rate and are easy to miss. Some agreements add an origination or administration fee on top of the factor-rate total, so the term sheet figure is not the figure leaving your account. And a top-up part-way through normally settles the original advance and starts a new one at a new factor rate, which is not the same as borrowing more on the terms you already agreed.
Sources
- FCA: unregulated business lending and the regulatory perimeter
- BVA BDRC: SME Finance Monitor
- British Business Bank: Small Business Finance Markets
- Gov.uk: finance and support for your business
- Companies House: check the entity on your agreement
Panel counts were checked September 2026 extract, available products only. Worked figures use round illustrative numbers and are not a quote.
Frequently asked questions about MCA costs
How much does a £30,000 merchant cash advance cost?▼
At a typical UK factor rate of 1.25, a £30,000 advance means you repay £37,500 in total. The £7,500 is the full cost, fixed from day one. There is no interest building on top. At a competitive rate of 1.2 the same advance costs £6,000, and at 1.4 it costs £12,000, which is why comparing offers matters.
Do I pay less if I repay a merchant cash advance early?▼
Usually not. The total repayable is fixed when you sign, so clearing the balance faster does not reduce the fee with most providers. If early settlement savings matter to you, a term loan is often the better product, and we can introduce you for that instead.
Are there hidden fees with a merchant cash advance?▼
The main cost is the factor rate, and reputable lenders put it in writing before you sign. Some providers charge an admin or origination fee on top, so always ask for the total repayable figure in pounds. Our service is free to you either way, we are paid a commission by the lender and we tell you how that works during your journey.
Is a merchant cash advance more expensive than a bank loan?▼
Measured over a year, usually yes. A loan at a competitive rate costs less in pure pounds if you qualify and can wait for it. What you are paying for with an MCA is speed, a fixed known cost, and repayments that drop when your takings drop. Whether that trade is worth it depends on why you need the money and how fast.
Does getting a quote cost anything or affect my credit score?▼
No. Enquiring does not affect your credit score, the service is free to your business, and there is no obligation. You see the numbers before any application goes to a lender.
Real customers. Real reviews.
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“Alex called me back the same afternoon and explained what the repayments would look like. We had the money in three days.”
“I pay it back on a daily basis and I kind of feel like I don't miss it.”
See your actual numbers, not the averages
2-minute form, and enquiring does not affect your credit score. We come back with what's available and the total cost in pounds before anything goes near an application. Many lenders advertise 24-hour decisions, with funds following within days.
CapExpand is a commercial finance broker, not a lender. We work with UK limited companies, LLPs, sole traders and partnerships.