Unlike a traditional business loan, there is no interest rate on a merchant cash advance. Instead, there is a one-time fee that’s added to your cash advance that’s based on the value of your future sales.

This one-time fee is determined by a factor rate, which is a multiplier of the amount of funding you receive. This factor rate typically ranges between 1.18 – 1.48.

Your cash advance amount is multiplied by the factor rate to determine the total amount that must be paid back. For example, if you’re approved for $25,000 in financing at a factor rate of 1.30, you’ll need to pay back a total of $32,500 ($25,000 X 1.30 = $32,500).

The factor rate is determined by our proprietary algorithm, and is based on a wide variety of details, including your industry, location, years in business, number of employees, amount of funds being provided, and more.

As a merchant cash advance lender, we create a unique internal credit score for your business that’s unrelated to the credit scores used by traditional lenders such as banks. Instead, we use a proprietary algorithm to evaluate risk and determine credit worthiness in a way that is specifically designed to meet the financing needs of small and medium businesses in Canada. This score is then used to determine the factor rate for your business cash advance.

The longer we work with your business and the more we understand your particular needs, the more funding we will be able to provide and the lower the factor rate will be. This is why business cash advances are one of the best options for small and medium business financing.

There is a significant difference between factor rates and interest rates – most notably that a factor rate determines the one-time fee added to your cash advance, which reflects the cost of borrowing.

While interest rates are calculated on an annualized basis, the factor rate simply determines a fixed fee that is added to your total repayment amount. And since payments are interest-free and based directly on your sales performance, this makes merchant cash advances the ideal business funding option for maintaining a positive cash flow.

The application process for a business cash advance is simple and you can be approved in as little as a few hours – with funds deposited directly into your bank account within 24-48 hours.

Unlike a business loan from a bank, applying for a merchant cash advance only requires providing a few basic documents, which include:

• A government-issued photo ID
• Your merchant ID number
• Recent bank statements
• A void cheque for the business bank account where your cash advance will be deposited

Once your application is approved:

• We will deposit the merchant cash advance directly into your bank account.
• We will connect directly with your payment processor to set up payments. 2M7 Financial Solutions works with most major payment processors in Canada, and the process is completely seamless and transparent.
• You will be able to monitor and manage your repayments online through your 2M7 account.

To discuss your business financing options or start your application process, please fill out the form here.