Ravenrock Funding Group, a small-business funding broker in Sarasota, Florida, explains and can arrange merchant cash advances through funding partners. A merchant cash advance is not a loan: it is a purchase of future receivables, remitted as a share of sales. The funding partner names the factor rate, the holdback and the conditions. Ravenrock helps owners total the cost and compare it with loan options first.
| What it is | Future receivables bought at a discount; not borrowing |
|---|---|
| Cost stated as | The advance multiplied by a factor rate |
| Collected through | A set slice of card or bank receipts |
| Before signing | Total every remittance and compare with a loan |
| Who decides | The funding partner |
Is a merchant cash advance borrowing, legally a loan?
No. A merchant cash advance is not a loan. The provider pays you a lump sum now in exchange for a larger amount of your future receipts. You do not borrow money and repay it; you sell part of what you expect to collect, and that part is remitted to the provider as sales come in.
So the words change too. There is no interest rate or APR on the contract. The cost is stated as a factor rate, and the amount you deliver is the purchased amount.
Factor rate, holdback and remittance
- Advance: the amount paid to the business up front.
- Factor rate: the multiplier that sets the purchased amount. The advance times the factor rate equals the total the provider is buying.
- Holdback: the share of daily card or bank receipts collected toward that total.
- Remittance: each collection, often taken daily from the business account or card processor.
Worked arithmetic on a hypothetical advance
A labelled illustration, not an offer: suppose a provider advances a hypothetical $10,000 and sets the factor rate at 1.3. The purchased amount is $13,000, so the cost is $3,000 no matter how quickly it is collected. If the holdback collects $130 on an average day, delivery takes roughly 100 business days. Faster sales mean faster collection and a higher effective annual cost; slower sales stretch it out. Our figures are arithmetic only; actual terms come from the provider.
Because the cost is fixed while the timing floats, comparing an advance with a loan takes care. Ask for the total purchased amount, the expected collection period, and any fees, in writing.
Questions to ask before agreeing
- What is the total purchased amount, in dollars?
- What holdback percentage applies, and is it taken daily or weekly?
- Are there fees on top of the purchased amount, and are they deducted at funding?
- How does reconciliation work, and what proof of lower sales is needed?
- Does the contract restrict other financing while it is open?
Compare the total cost with at least one loan option before you agree. We will do that comparison with you on request.
Reconciliation when sales slow
Many agreements include reconciliation: if receipts fall, the business can ask for collections to be adjusted to the agreed share of actual sales. How reconciliation works, what proof is needed and how quickly it applies differ by contract. Read that clause closely.
Stacking and what it means
Stacking means taking a second advance or loan while an earlier advance is still being collected. Each new position takes its own share of receipts, and the combined remittances can leave little for payroll and rent. Many agreements restrict stacking. Tell us about every open position so we never suggest one that conflicts with an existing contract.
If a business cannot keep up
What happens if you default on a merchant cash advance depends on the contract. Agreements often define default events, such as switching processors or blocking collections, and spell out the provider's remedies. Owners searching for a merchant cash advance attorney in Florida usually want exactly that clause explained; that is a question for your own lawyer, not for a broker.
Where advances get offered in Sarasota County, FL
Card-heavy businesses such as restaurants, with 907 restaurants and other eating places counted in Sarasota County in 2023 (County Business Patterns 2023), are the ones most often offered advances. Before agreeing, compare the total cost with working capital financing or a line of credit. The industry pages show which options each sector tends to use; our Sarasota, FL page has the county picture; how it works explains our steps.
A merchant cash advance is not a loan, and we will not describe it as one.
By Ravenrock Funding Group · Updated