Typically somewhere between 5% and 20%. Because it is a percentage rather than a fixed sum, repayment flexes with revenue — slower in a bad week, faster in a good one. That flexing is the feature that distinguishes a true advance from a loan, and it is the first thing a court looks at when deciding whether a transaction has been mischaracterised.
Related terms
Reconciliation
The contractual process by which a merchant can have their remittance adjusted when actual receipts fall short of what was projected.
Factor rate
A multiplier applied once to an advance amount to give the total repayment — a $50,000 advance at 1.40 means $70,000 repaid.
ACH remittance
Repayment collected by scheduled debit from the merchant’s bank account rather than as a split of card receipts.
Revenue-based financing
Funding repaid as a percentage of ongoing revenue rather than on a fixed schedule.
Settlement schedule
The timetable on which a payment processor or marketplace pays out a merchant’s takings.
Recharacterisation
A court or regulator determining that a transaction structured as an advance was, in substance, a loan.