Merchant Cash Advance to Annual Interest Calculator

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in eCommerce, Merchant Cash Advances are common financial offereings. Both Shopify and Amazon have integrated financial offerings based on your sales data. These offers are often quite appealing: borrow $10,000 and payback $11,000 in 6 months.

At face value these offers seem like a fair market rate like 10% in that case. However, it’s a bit deceiving.

If you had instead borrowed with a term loan, then as you pay down the principal of the debt the interest payments come down as well.

So, borrowing $10,000 at 10% APY, with monthly payments you’d pay back about $10,530. Not $11,000. That’s a big difference!

Here’s the calculator to find the equivalent APY rate for a merchant cash advance. Use this to more fairly compare the cost of credit and wether or not you’d be better off with credit cards