Understand what is being purchased
Revenue-based funding and merchant cash advances are often structured around future business receivables. The agreement may use a factor rate and frequent remittances instead of a traditional interest rate and monthly payment.
Model the cash-flow impact
Estimate total repayment and test the daily or weekly deduction against slow and strong revenue periods. Review stacking restrictions, reconciliation terms and what happens after a payment problem.
- Advance amount
- Factor rate
- Estimated total repayment
- Payment frequency
- Reconciliation and default terms
Important: This article is general education, not legal advice, a credit or lending decision, an offer of financing or a promise of any result. Provider terms and state requirements may differ.