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A/R Finance & Factoring Terms GLossary

What isMCA ACH Loan Rule of Thumb

Whatever the MCA Rate Factor dollar amount is over the payback period, your net profit should be more. If not, at the end of that period you will be that much closer to bankruptcy. For example, if the ACH loan cost is $20k and you are paying it back over 3 months and your net profits are less than $20k in those 3 months – DON’T DO IT!

An ACH loan only makes sense if you are using the money for a one-time, high-profit transaction or you need that last $20k to open your next location or buy a piece of equipment to generate more incremental sales and profits.

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