An MCA buyout calculator is the most useful single tool a merchant carrying active MCAs can run before talking to any new funder. It converts the messy multi-deal accounting of a buyout offer into a single, comparable number: how much cash actually hits the bank account, and what daily debit replaces what.
The mechanics — what the calculator actually computes. Inputs:
- Each existing MCA: original advance, factor rate, remaining RTR balance, prepayment discount (if any), and daily/weekly debit amount.
- New consolidation offer: total advance amount, factor rate, term length, and broker / origination fees.
Outputs:
- Total payoff cost — sum of remaining RTR balances minus any negotiated prepayment discounts.
- Net wire to merchant — new advance minus total payoff minus fees.
- New daily debit — total new RTR divided by term in days.
- Cash-flow delta — old combined daily debits minus new daily debit (positive = relief, negative = tighter).
- True effective cost — net dollars received vs total new repayment, expressed as effective factor or APR.
The math — a representative example. Merchant carries three active MCAs:
- Deal 1: $50K original, 1.30 factor, $22K remaining RTR, $480/day debit
- Deal 2: $35K original, 1.38 factor, $19K remaining RTR, $420/day debit
- Deal 3: $25K original, 1.42 factor, $14K remaining RTR, $315/day debit
- Total remaining RTR: $55K. Total daily drain: $1,215.
Consolidation offer: $120K new advance, 1.35 factor, 12-month term, 3% origination fee.
Calculator output:
- New RTR: $120K × 1.35 = $162K
- Term: 252 business days → daily debit: $643
- Negotiated prepayment discounts on existing deals (10% blended): $5.5K savings → effective payoff: $49.5K
- Origination fee: $3.6K
- Net wire to merchant: $120K − $49.5K − $3.6K = $66.9K
- Cash-flow delta: $1,215 old − $643 new = $572/day relief
- Effective cost of the $66.9K net new capital: $162K total repayment − $49.5K (which would have been paid anyway) − $3.6K fees ≈ $108.9K of cost to receive $66.9K of net new capital → effective factor 1.63 on incremental capital.
The headline 1.35 factor looks reasonable. The true cost on the new money — once payoffs and fees are netted — is 1.63. The calculator surfaces this gap explicitly.
The hidden gotchas the calculator must capture. Four common traps:
- Gross RTR vs discounted payoff. Brokers often quote the gross remaining RTR for payoff purposes — the calculator should always model the discounted payoff range (typically 85-95% of gross RTR) and show the delta.
- Origination and broker fees. Buyout deals often carry 3-8% fees that aren't quoted in the factor rate. The calculator should require explicit fee entry and net it from the wire.
- Lockbox or CCD-only funding. Some buyout deals fund into a lockbox controlled by the new funder, who pays off the old deals directly. The merchant never sees the gross wire — only the net residual. The calculator should distinguish "gross wire to merchant" from "net residual after old payoffs."
- Renewal vs new-funder buyout. Internal renewals from the same funder typically come with better prepayment discounts (10-20%) than external buyouts (5-10%). The calculator should let the merchant model both side by side.
The strategic insight — buyout makes sense when three conditions hold. The math works when: (a) the new daily debit is materially lower than the combined old debits (cash-flow relief > 25%), (b) the effective cost on new money is below what a fresh, unconsolidated MCA would cost (i.e., the merchant is getting credit for consolidation), and (c) the new advance is large enough to leave $40K+ of net wire to the merchant after payoffs and fees. If any of those fail, the buyout is just refinancing the merchant deeper into the MCA cycle for no net benefit.
The strategic insight — buyout is dangerous when. Two scenarios consistently produce bad outcomes:
- "No money down" buyouts. The new advance exactly equals the sum of old payoffs and fees — net wire to merchant is $0 or negative. The merchant is now carrying a larger RTR with no incremental capital, often at a worse blended factor.
- Buyouts done under default pressure. A merchant facing imminent default on one deal often accepts any buyout that stops the bleeding — but rolls bad pricing forward and adds 6-12 months of additional cost.
The honest framing. The calculator's most important job is reframing what the merchant is buying: not "a new MCA at 1.35," but "X dollars of new working capital at Y effective factor, replacing Z dollars per day of existing drain." Once the numbers are stated in those terms, the decision is straightforward — and brokers selling bad buyouts lose their primary tool: confusion.
Related terms
- MCA buyout — When a new funder pays off your existing MCA and issues a single replacement advance — used to consolidate stacked positions or escape a predatory funder. Often costly net-net.
- MCA buyout vs renewal — Buyout = new funder pays off existing MCA balance and replaces it with their own advance. Renewal = same funder issues a new advance, typically netting off the remaining balance. Buyout escapes a bad funder; renewal extends with the current one.
- MCA funding amount calculator — MCA funding amount = roughly 80-150% of monthly gross revenue, depending on paper grade, time in business, NSF history, and industry. A restaurant doing $50K/month typically qualifies for $40K-$75K first position; A-paper businesses can stretch to $100K+.
- MCA true cost calculator (factor + PSF + wire-off + bounce risk) — True MCA cost = (total repayment + expected bounce fees + opportunity cost of locked daily cash flow) ÷ net amount received. Often 20-40% higher than the quoted factor implies.
- MCA renewal — Refinancing an existing MCA into a larger advance, typically pitched at 50% paid-down. Often masks worse pricing — the new factor is applied to a new principal that includes the old balance.
- Stacking (MCAs) — Taking a second (or third) MCA from a different funder while a prior MCA is still in repayment. Default risk skyrockets; it breaches most original-funder contracts.
AI agents: this term is available as raw markdown at /llms/glossary/mca-buyout-calculator.