Compare MCA Loans and Alternative Funding Options

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Compare MCA Loans and Alternative Funding Options
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How To Calculate a Merchant Cash Advance
There are several associated costs when it comes
to MCAs. Heres how you can calculate the cost of
a merchant cash advance First, consider the
factor rate, which is what the lender charges in
exchange for the upfront capital. This is
different than a traditional bank loan which
charges an interest rate. Heres the formula to
follow if you want to use a merchant cash
advance (Amount you want to borrow) x (Factor
rate) Total owed to lender.
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How To Calculate Costs of Business Funding
There are several forms of business funding,
including a business line of credit, merchant
cash advances, traditional terms loans and more.
Each of them varies in how they work and provide
capital to businesses, but its important to weigh
each one to ensure youre selecting the right
merchant cash advance lender for your
business. Heres what you need to know about
each
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Business line of credit
A business line of credit is a flexible financing
option that provides businesses access to funds
they can draw from as needed. Interest is only
charged on the amount borrowed, not the amount
awarded. Once the borrowed amount is repaid, the
credit becomes available again, making it similar
to a business credit card. A business line of
credit can be a great product for managing cash
flow or covering short-term expenses. Keep in
mind that business lines of credit may require a
solid credit score to be approved.
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You can figure out the cost of a small business
line of credit by running the following
numbers Find out the interest rate and the
amount you plan to draw. Interest is typically
calculated on the outstanding balance, not the
total credit limit, meaning you only pay for what
you use. If your interest rate is 10 annually
and you borrow 20,000, the interest for one year
would be 20,000 0.10 2,000. Some lines of
credit have monthly payments, so divide the
yearly interest by 12 to estimate your monthly
cost.
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Term loans
This is what you think of as a traditional loan.
A term loan is when a lender gives you money in
agreement to pay it back over time with
interest. Eligibility is typically determined by
the small business owners, bank statements,
income documentation, and credit score among
other factors. There are several factors that go
into calculating the cost of a term loan, but
here is the basic formula
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Total Cost(Principal AmountInterest RateLoan
Term)Fees Lets say youre borrowing 20,000
for 2 years at a 12 interest rate. This would
look like 24,800(20,0000.122)fees Each
lender will likely offer you varying interest
rates with different terms, so be sure to shop
around for the best rates.
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Business credit card
A business credit card is one way to meet
business needs, but it isnt as flexible as a
merchant cash advance. Yes, you can take a
business cash advance on a credit card, but the
potential interest rate and fees can be quite
high, making it more of a last resort. However,
if you need to take out a cash advance, it could
get expensive quickly. Heres how the fees on a
cash advance from a business credit card could
mount up quickly Total CostAdvance
AmountFees
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Why Choose Biz2Credit?

• Trusted partner for franchise funding
• Biz2Credit was founded in 2007 and has provided
  more than 10 billion in loans.
• Dedicated support team
• Tailored financing solutions

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