Cash arrives up front, and the provider takes back a set total out of later card receipts. The factor sets that total; the holdback percentage and daily sales set how long collection takes. The examples are invented, and providers set any terms.
At a glance
- What it is
An advance against future card sales
- Cost set by
The factor in the offer
- Pace set by
Holdback percentage and daily card sales
From the factor to the total: pricing a cash advance for a Collierville, TN quick-service restaurant
No interest rate appears on an advance offer; a factor does the pricing. The advance amount times the factor gives the total the provider collects, and the difference between the two is the cost of the advance.
Illustration only, invented figures: a Collierville, TN quick-service restaurant takes a $17,500 advance at a 1.23 factor. The provider collects $21,525 in all, so the invented cost of the advance is $4,025.
Collection runs at a 9% holdback of daily card sales in this invented offer. With invented card sales of $1,745 a day, the provider’s daily share is $157.05, which works out to roughly 138 business days before the invented $21,525 is fully remitted, counting a partial last day as a full one.
ZIP Code Business Patterns listed 48 limited-service restaurants with a ZIP 38017 address in 2023 (NAICS 722513).
A percentage of card sales or a fixed daily debit: two ways a Collierville, TN restaurant’s advance can be collected
A provider can collect in two ways. A split takes a fixed percentage of each day’s card sales, so the daily amount moves with sales. A fixed daily debit takes the same dollar amount from the bank account each business day, whatever the day’s sales were.
| Collection method | Daily card sales | Amount per business day | Business days to finish |
|---|---|---|---|
| 10% of card sales | $2,100 | $210.00 | 137 |
| 10% of card sales | $1,600 | $160.00 | 179 |
| Fixed daily debit | Any | $190.00 | 151 |
For the restaurant in this invented table, the percentage method takes longer when daily sales are lower but never asks for more than a tenth of the day’s card receipts. The fixed debit finishes in 151 business days whatever the sales, and on a $1,600 day it takes $190.00 from the account where the split would take $160.00.
Restaurants and other food and lodging businesses with paid staff numbered 2,006 in Shelby County, TN in 2023, the accommodation and food services count from County Business Patterns.
Offer, signing, daily remittance, final day: a cash advance walked through for a Collierville, TN auto repair shop
- The shop shares recent card-processing statements, and a provider may look at its daily card volume.
- Any offer that follows an advance request names the advance amount, the factor, the holdback percentage and any fees.
- After signing, the provider pays the advance into the shop’s bank account.
- From then on, the card processor or a bank debit moves the holdback share of each business day’s card sales to the provider.
- When the remitted amounts reach the agreed total, the daily collections end.
Illustration only, invented figures: a brake-and-alignment shop in Collierville, TN accepts $15,500 priced at a 1.22 factor, with $18,910 to be remitted from card receipts under an 8% holdback. If the shop’s card terminals take an invented $1,300 a day, $104.00 of that is set aside for the provider, and remitting the full invented amount takes about 182 business days.
For scale, 331 auto repair and maintenance establishments with paid staff operated in Shelby County, TN in 2023, per County Business Patterns. ZIP Code Business Patterns, a separate count, listed 19 with a ZIP 38017 address.
Turning a factor into a dollar cost before signing: two offers for a Collierville, TN retail shop
Two factors a tenth apart can look close on paper. Multiplying each one by the advance turns it into dollars, which is the plainest way to set two offers side by side before signing.
| Offer | Factor | Total to remit | Cost of the advance | Business days to finish |
|---|---|---|---|---|
| A | 1.18 | $14,160 | $2,160 | 158 |
| B | 1.29 | $15,480 | $3,480 | 172 |
In this invented pair, offer B costs $1,320 more and takes 14 more business days to finish at the same invented sales.
Owner-only shops are counted separately: Shelby County, TN had 6,525 retail trade businesses with no paid employees in 2024 (Nonemployer Statistics).
A cash advance vs. a term loan for a Shelby County, TN bar: no annual rate and no fixed end date
A term loan charges interest at an annual rate on a balance that falls with each fixed payment, and it ends on a set date. A cash advance has no annual rate and no fixed end date: the factor fixes the total at signing, and the end date depends on how soon card sales cover it.
- Term loan: a monthly payment fixed in dollars. Advance: a daily amount set as a share of card sales.
- Term loan: interest shrinks as the balance falls. Advance: the cost is set at signing.
- Term loan: a known final payment date. Advance: finishes when the agreed total has been remitted.
- Term loan: paying off early may cut the interest owed. Advance: settling early may or may not lower the total, as the agreement states.
A bar with steady card sales and a cost it wants covered right away may weigh both; a term loan suits a purchase that lasts years.
Shelby County, TN had 47 drinking places (alcoholic beverages) with paid staff in 2023, by County Business Patterns (NAICS 7224).
How the holdback percentage sets the pace of collection for a Collierville, TN dental office
Think of the holdback as the provider’s cut of every day’s card receipts. A higher holdback finishes collection sooner but leaves less of each day’s receipts in the account; the total remitted stays the same.
| Holdback | Per business day | Business days to finish |
|---|---|---|
| 8% | $192.00 | 131 |
| 11% | $264.00 | 95 |
For the dental office in this invented case, the 11% holdback finishes 36 business days earlier, at the price of $72.00 more out of each day’s invented card receipts.
Plug the dental office’s invented numbers into the calculator here (advance, factor, holdback and daily card sales) and it shows the same total, cost and day count; a real offer can be checked the same way.
Dental offices belong to the health care and social assistance sector, which counted 128 establishments at ZIP 38017 addresses in 2023, by ZIP Code Business Patterns.
By Baydale Funding Group · Updated
