Two numbers run an advance: the factor, which fixes its price, and the holdback, which fixes how much of each day's card sales goes toward it. This page covers how the price is set, an advance from funding day to the last collection, two factors compared, how the holdback changes the pace, and an offer collected as a set dollar amount each business day.
At a glance
- Collected through
A share of each day's card sales
- Price
A factor fixed in the offer
- Limited-service restaurants, Jim Wells County, TX
30 employer establishments (CBP 2023, NAICS 722513)
Pricing a card-sales advance in Alice, TX: one factor, one fixed total, set before collection starts
In exchange for the advance, the funding source takes a share of card sales the business has yet to make, priced below their face value. The advance is not a loan and nothing is lent at interest, so the offer shows a factor instead of a rate: the advance times the factor is the total to be collected, and that total does not grow with time.
- Advance: the sum paid to the business
- Factor: the multiplier, such as 1.2 or 1.4, set by the funding source
- Total to be collected: advance times factor
- Holdback: the cut of daily card sales that goes to the funding source until the total is met
Fees listed in the offer, if any, come on top. The factor and holdback are set in the funding source's offer, not by Southmoor Business Funding.
From funding day to the last collection: a merchant cash advance at a Jim Wells County, TX quick-service restaurant
Illustration only, invented figures: a Jim Wells County, TX quick-service restaurant takes an advance of $14,860 at a 1.33 factor, with a 9% holdback and $2,150 of card sales on an average day.
| Item | Figure | How it is found |
|---|---|---|
| Total to be collected | $19,763.80 | $14,860 x 1.33 |
| Cost of the advance | $4,903.80 | Total minus the advance |
| Collected on an average day | $193.50 | 9% of $2,150 |
| Days of card sales to finish | 103 | $19,763.80 / $193.50, rounded up |
In this invented case, collection takes about 103 days with card sales, by our arithmetic. Busier days send more and quieter days less, but the invented $19,763.80 total stays the same.
County Business Patterns counted 30 limited-service restaurants with employees in Jim Wells County, TX in 2023, employing 699 people.
The factor sets the whole cost: two invented offers on an Alice, TX convenience store's repair bill
Because the total is fixed on day one, the factor is the whole price. Two invented offers on the same $6,340 repair bill at an Alice, TX convenience store show how far apart offers can be.
| Offer | Total to be collected | Cost of the advance |
|---|---|---|
| 1.21 factor | $7,671.40 | $1,331.40 |
| 1.38 factor | $8,749.20 | $2,409.20 |
The invented 1.38 offer costs $1,077.80 more for the same $6,340, by our arithmetic. With a 10% holdback on $1,000 of daily card sales, it also takes 88 days of card sales to finish, against 77 for the 1.21 offer in this invented example.
Holdback decides the pace, not the price: beer and grocery stock at an Alice, TX store
Where the factor fixes the price, the holdback fixes the daily pace: a bigger share of each day's card sales reaches the total sooner, but the total itself does not move. Two articles follow the same mechanics further: a motel front desk, batch by batch, and how a store card share sets the day count.
Illustration only, invented figures: an Alice, TX store selling beer and grocery stock takes $7,960 at a 1.26 factor, so $10,029.60 is to be collected. Its card sales average $1,180 a day in this invented case.
| Holdback | Collected a day | Days to finish |
|---|---|---|
| 8% | $94.40 | 107 |
| 14% | $165.20 | 61 |
Both invented versions cost $2,069.60. With the 14% holdback in this invented case, more comes out of every day's sales, but collection finishes in 61 days instead of 107, by our arithmetic. Grocery and convenience stores (NAICS 4451) counted 9 Jim Wells County, TX employer establishments in 2023, and 44.4% of them had fewer than five employees (County Business Patterns).
A set dollar amount each business day instead of a card-sales share: an Alice, TX retail store's offer
Some advance offers take a set dollar amount each business day rather than a percentage of that day's card sales, and the difference shows on slow days. Illustration only, invented figures: an Alice, TX retail store is offered an $11,420 advance at a 1.27 factor, so $14,503.40 is to be collected, at $185 a business day.
In this invented case, 78 days at $185 collect $14,430.00, and a last debit of $73.40 on day 79 finishes the total. The daily amount does not move with sales: on a $950 card-sales day the $185 takes 19.5% of the day's card sales, and on a $1,700 day it takes 10.9%, by our arithmetic.
A 12% share of card sales on the same two invented days would collect $114.00 and $204.00 instead, so a quiet week sends less and adds days to the count. The offer's wording says which kind of collection it uses. Where a business line of credit is already in place, a draw for the same bill is priced by the day instead of by a factor.
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