01 / The mechanics
How it works
- You receive a lump sum and agree a total amount to be repaid, fixed at the start.
- Repayment is taken as a percentage of takings, so it flexes with trade rather than sitting on a fixed date.
- Because the total is fixed, repaying faster does not reduce the cost — it raises the effective monthly cost.
- Renewing or topping up before the first advance is repaid is where this route most often becomes unmanageable.
02 / The trade-offs
Who it usually suits
Card-heavy trade with steady volume and an urgent, short-lived need.
Where the cost sits
A factor applied to the advance, producing one fixed total repayable. Convert it to an annual equivalent before comparing it with anything else.
03 / Look closely
What to watch for
Cost expressed as a factor rather than a rate: the shorter you repay it, the more expensive it is per month.
Questions worth asking
- What is the total amount repayable, in dollars?
- What percentage of takings is withheld, and can it be reduced in a bad month?
- What happens if I want to refinance or take a second advance?
- Is a personal guarantee or confession of judgment involved?
04 / Take a step back
Before you commit
Almost anything repaid on interest rather than a factor will cost less. Treat an advance as a short bridge, never as a way to fund ongoing losses.