Worked example: how a £30,000 merchant cash advance actually plays out
This is an illustrative worked example with round numbers, not a client case study and not a quote — real offers depend on your trading and differ between funders. The point is to show the mechanics: what a factor rate and holdback do to a business’s cash, month by month, from drawdown to final payment.
The setup: a food business takes a £30,000 advance at a 1.25 factor rate with a 12% holdback on card takings. Total repayment is fixed on day one at £30,000 × 1.25 = £37,500, so the cost of the money is £7,500 whatever happens next.
What repayment looks like in a normal month
Suppose the business takes £40,000 a month in card payments in an average month. The holdback deducts 12% of each day’s card takings, so a £40,000 month sends £4,800 to the funder and leaves £35,200 flowing into the business as usual. At that pace, £37,500 is repaid in just under eight months.
| Monthly card takings | Deducted (12%) | Kept by the business | Months to repay £37,500 at this pace |
|---|---|---|---|
| £30,000 | £3,600 | £26,400 | about 10.5 |
| £40,000 | £4,800 | £35,200 | about 7.8 |
| £50,000 | £6,000 | £44,000 | about 6.3 |
What happens in a quiet month
This is the feature the product is built around. If takings drop to £25,000 in a slow January, the deduction drops with them to £3,000 — there is no fixed instalment to find. The trade-off is symmetrical and worth seeing plainly: repaying more slowly does not reduce the £37,500 total, so a quiet run of months stretches the same fixed cost over a longer period. Faster repayment does not save money either; the factor-rate cost was set at signature.
When does this example make sense, and when not?
Run the purpose against the £7,500 cost. If the £30,000 buys stock or equipment that earns back more than £37,500 within the repayment window, the advance has paid for itself; the businesses this structure suits are ones whose revenue is card-based and whose plan for the money is specific. The example works badly if the £30,000 is covering ongoing losses — the deduction makes every future month 12% tighter while the underlying problem continues.
Two checks belong next to any real offer: the equivalent cost over your realistic repayment period (a £7,500 cost over eight months is a very different annualised rate than over sixteen), and the twelve questions on our checklist, starting with whether the quoted total includes every fee.
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Frequently asked questions
How is the total cost of a merchant cash advance calculated?
Advance × factor rate. In this example, £30,000 × 1.25 = £37,500 to repay, a fixed cost of £7,500. The factor rate is set before signature and the total does not change with repayment speed — faster repayment does not reduce it, slower repayment does not increase it.
What percentage of card sales does an MCA take?
The holdback varies by funder and by deal; this illustration uses 12%. The percentage is fixed in the agreement, so the pound amount deducted rises and falls with daily takings. Ask what the exact percentage is, and whether deductions are daily or weekly, before signing.
Is this example what I would actually be offered?
No — it is an illustration with round numbers to show the mechanics. Real factor rates and holdbacks depend on trading history, sector and the funder’s current appetite, and can be better or worse than the figures used here. Any real quote should state your actual total repayment as one fixed number.
Is CapExpand FCA regulated?
CapExpand Ltd is not directly authorised by the Financial Conduct Authority. CapExpand Ltd (FRN 1060885) is an Appointed Representative of White Rose Finance Group Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 630772). That appointment means White Rose Finance Group Limited is responsible for our credit broking, and both firms appear on the Financial Services Register at register.fca.org.uk. We are a credit broker, not a lender.
Want this worked through on your numbers?
Send your card takings and the amount you have in mind. You get the same table back with real figures.
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CapExpand Ltd · Company No. 14433858 · ICO ZB789649 · Annesley, Nottingham
Important information
CapExpand Ltd (FRN 1060885) is an Appointed Representative of White Rose Finance Group Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 630772). We are a credit broker, not a lender, and we do not provide financial, tax or legal advice. We work with a panel of lenders whose particulars are available on request. If a deal completes the lender pays us a commission, at no cost to you; different lenders pay different amounts under different models, and we will tell you the amount for your deal on request. All lending is subject to status, valuation where applicable and the lender's own checks.
Registered office: Pure Offices, Lake View Drive, Annesley, Nottingham, NG15 0DT. Company No. 14433858.