Does paying off a merchant cash advance early save money?
Usually not by default. A factor rate is flat and time-blind, so the purchased amount is the same whether it clears in three months or fifteen. Paying early saves money only if the funder offers an explicit discount or early-payoff schedule in writing.
Start an applicationThis is the opposite of how a loan behaves. On an amortizing loan, paying early cuts the interest you never accrue. On an advance there is no interest to accrue — the funder purchased a fixed $130,000 of receivables for $100,000, and $130,000 is what is owed on day one. Clearing it in four months instead of ten does not reduce the figure; it raises the effective annualised cost, because the same dollar cost is compressed into less time.
Some funders do offer early-payoff discounts, and some renewal structures credit a portion of the unearned amount. Both are negotiated terms that must appear in the agreement. A verbal assurance that the funder will 'take care of you' on an early payoff is not a term, and it is not enforceable.
The practical implication is that speed of repayment is not a lever for saving money on an advance — it is a lever on cash flow pressure. If the goal is to reduce the total cost of capital, the route is a different product or a better-priced position, not faster remittances on the same paper.
How cost is quoted, by product
Figures are typical ranges for a complete file, not guarantees. Final terms depend on revenue, time in business, credit profile and lender review.
| Merchant Cash Advance (MCA) | Factor 1.15–1.45 |
|---|---|
| Business Line of Credit | ~8–20% APR |
| Invoice Factoring | 1.5–4% of invoice |
| Equipment Financing | ~7–18% APR |
| Bridge Loan | ~10–18% APR |
| Term Loan | ~8–22% APR |
| Inventory Financing | Quoted per file |
| Acquisition Financing | Stack-dependent |