Funding information: Aarubi Finance Ltd provides Merchant Cash Advance services with YouLend and 365 Finance and may introduce eligible businesses to selected unregulated commercial finance providers. We are not FCA authorised and do not provide consumer credit, regulated mortgages or personal financial advice. Eligibility and terms apply.
The useful question is not simply “what is the factor rate?” It is “how much usable cash will I receive, what must I pay back, and what will be left to run my business?”
For short answers, see our Merchant Cash Advance FAQs. This guide is general information, not a recommendation to take funding.
Separate the fee from the collection percentage
An MCA commonly links collections to future eligible sales. Providers may describe the cost as a fixed fee or a factor rate. Neither is the percentage of sales collected towards the balance.
365 Finance's FAQs explain its sales-linked model. Products and collection methods differ, so obtain the proposed agreement rather than assuming every provider uses identical terms.
An illustrative example
Suppose you receive £20,000 and the fixed fee is £4,000, with no other charges. The total payable is £24,000, equivalent to a factor of 1.20.
The fee is £4,000—not £24,000. The factor does not mean 20% APR: an annualised comparison depends on the timing of the cash flows.
If the collection rate is 10%, £10,000 of eligible monthly sales produces £1,000 of collections, leaving £9,000 before business costs. At £20,000 of sales, the corresponding figures are £2,000 and £18,000.
These are invented figures for explanation, not typical prices or an offer. Our finance FAQ worked example sets them out in a table.
Model quieter trading
Use actual sales history to test what the deduction would leave after stock, rent, wages, tax and existing finance. The provider may calculate eligible sales differently from your accounting turnover; ask about refunds, online payments and other exclusions.
With sales-linked collections, quieter trading can extend the repayment period. It does not automatically reduce a fixed fee or release you from the agreement. Check any minimum-payment, reconciliation, reporting and default provisions.
A faster collection period can put greater pressure on day-to-day cash and increase the annualised cost of a fixed fee. Do not treat quick repayment as automatically cheaper.
Questions to ask before agreeing
- How much cash reaches my account after deductions?
- What is the total payable, including separate fees?
- Which sales count and what percentage is collected?
- What happens when turnover falls or trading stops?
- Is there a personal guarantee, indemnity or other security?
- Can I change payment providers or take further finance?
- What settlement figure applies if I pay early?
- Which credit checks occur before a quote or full application?
Some providers offer discounts under particular early-settlement terms; others leave the fixed fee unchanged. Ask for the actual calculation in writing.
Compare alternatives fairly
Compare an advance with suitable alternatives using the same cash requirement and realistic payment assumptions. A term loan may cost less, but neither price nor speed is guaranteed. A smaller regular deduction does not by itself make a proposal affordable.
The British Business Bank's MCA guide provides an independent overview. Our business loan costs guide explains how to compare fees, payment timing and risk.
Does a broker comparison leave my credit file untouched?
Do not assume so. Ask which providers will receive an application and whether they use soft, hard, business or personal searches.
Does flexible repayment remove personal risk?
No. Check the agreement and any guarantee separately. Sales-linked collections do not prove that the obligation disappears if the business closes.
Can AARUBI help with an enquiry?
Visit business funding to explain your needs. The initial form does not require bank statements or identity uploads. Provider assessment, affordability and terms determine any offer.
Reviewed on 30 September 2026.
