A merchant cash advance is collected as a set share of each day’s card sales until a fixed total is reached, and it is not a loan. For an Auburn, AL restaurant, the holdback share decides how many days collection runs, not how much is collected. One invented sit-down restaurant’s advance shows the arithmetic at three holdback shares.
The factor fixes the total collected; the holdback share sets the daily amount and so the number of collection days. Card sales that move to cash or house accounts stretch collection. A working capital loan or a credit line has a fixed payment instead. The restaurant and its card sales are an invented case.
Collected from each day’s card sales: an Auburn, AL sit-down restaurant’s advance
Illustration only, invented figures: a sit-down restaurant takes a merchant cash advance of $16,800 with a 1.27 factor, so the provider collects $21,336.00 in total. The restaurant settles invented card sales of about $2,640 a day, and the provider keeps its share of each day’s batch until the total is reached.
On this site, the one option collected out of card sales is the merchant cash advance: a purchase of future card receipts for a fixed total, which the provider collects from those sales instead of billing a set payment on a schedule.
Lee County, AL had 434 accommodation and food services employer establishments in 2023 (County Business Patterns). ZIP Code Business Patterns placed 177 of that sector’s employer establishments at ZIP 36830 addresses the same year.
Three holdback shares on the same advance, and how long collection runs
Illustration only, invented figures: the provider could set the share at 9%, 12% or 15% of the restaurant’s $2,640 daily card sales. The table rounds the day count up, since the last day finishes the total.
| Holdback share | Collected each day | Collection days | Total collected |
|---|---|---|---|
| 9% | $237.60 | 90 | $21,336.00 |
| 12% | $316.80 | 68 | $21,336.00 |
| 15% | $396.00 | 54 | $21,336.00 |
In this invented table the 15% share finishes in 54 days and the 9% share takes 90, but each row collects the same $21,336.00. A larger share takes more from each day’s sales and ends sooner; a smaller one leaves more cash in the register each day for longer.
The total collected stays fixed, and so does the cost per dollar received
In this invented case the advance costs $4,536.00: the $21,336.00 collected less the $16,800 received. That invented cost is $0.27 for each dollar advanced, whichever holdback share applies and however many days collection takes.
An offer for an advance spells out the pieces this arithmetic needs. Reading them side by side before signing shows the whole cost:
- The amount advanced, after any fee taken at funding.
- The factor, and the total to be collected that it produces.
- The holdback share, and which card batches or accounts it applies to.
- Any fee for setup or for changing the collection account.
- What happens to collection if the card processor changes.
Because the cost does not grow with time, a factor cannot be read as an annual rate. A shorter collection period means the same dollar cost is paid over fewer days, which is why two advances with the same factor can feel very different to run.
Card sales, cash and house accounts: what the holdback can and cannot see
Illustration only, invented figures: if more guests pay cash, or a catering client is billed on a house account, card batches may average $2,112 a day instead of $2,640. At the 12% share, the provider then collects $253.44 a day and the invented advance runs about 85 days instead of 68.
The total stays $21,336.00 in this invented case; only the calendar stretches. A restaurant that would rather have one known payment date can compare a working capital loan, which has a fixed schedule, or a line of credit drawn for a short gap and paid down. Funding partners and providers each set their own terms on any offer.
By Hazelbridge Financial · Updated
