What it is
Payment and selling platforms (Square, Shopify, Stripe, PayPal, Toast and others) offer their own sellers money based on their sales history, for a flat fee. It's repaid by keeping a share of each day's sales until the total is paid, often with a minimum every 60 or 90 days. Merchant cash advances from other funders work similarly, but buy a slice of your future sales at a factor rate (typically 1.1 to 1.5, so you repay $1.10 to $1.50 for each $1) and often debit your bank account every day.
What it really costs per year
Because the fee is flat, the yearly cost depends on how fast it's paid back. A 12% fee, near the typical platform fee in the deals this site compares, costs about 46% a year if it's repaid in six months, 23% over a year and 15% over eighteen months. Square's sellers have historically repaid in about ten months on average.
Advances from other funders cost much more: their typical fee in the same data is about 37%, which works out to about 67% a year repaid over twelve months and 133% over six. Estimates of 40% to over 300% a year are common.
Only California and New York require an estimated APR on these offers (Vermont from July 2027). Elsewhere you'll usually see only the fee, so work out the yearly cost yourself.
Work out the yearly cost of an offer you have
How fast the money comes
Platform offers fund in a day or two, some within minutes. Other funders typically fund within one to three days of approval.
Who qualifies
- Platform capital goes to sellers with a few months of steady sales on that platform, by invitation; there's no application and usually no personal credit check.
- Other funders typically want $8,000–$10,000 or more in monthly sales and six months in business, and approve most applicants: 48% fully and 40% partly in the Federal Reserve's 2026 survey.
Where it breaks
- Paying back fast makes the yearly cost high, and the daily cut of your sales drains cash in slow weeks; missed minimums are debited from your bank account.
- Stacking: carrying two or more advances at once, which is how payments outgrow sales.
- Broker-sold advances from other funders have drawn regulator action over hidden fees, hidden personal guarantees and payments taken after payoff.
- It's sized to one platform's slice of your sales, and offers can disappear.
Compare with
- Bank loans and lines of credit: yearly cost about 7–11%, money in 2–8 weeks.
- Business credit cards and 0% offers: yearly cost about 13–29%, money in days to 2 weeks.
- Revenue-based financing: yearly cost about 18–51%, money in days to weeks.