--- title: What is the true cost of your merchant cash advance? description: A merchant cash advance can cost more than you think. When it comes to the small print, are you being overcharged? image: https://www.quikstonecapital.com/hs-fs/hub/311686/file-1149843909.jpg --- [![Merchant Cash Advance](https://www.quikstonecapital.com/hs-fs/hubfs/_Website/Logos/Web-Combo-11.png?width=200&name=Web-Combo-11.png "Merchant Cash Advance")](https://www.quikstonecapital.com/) [![Merchant Cash Advances](https://www.quikstonecapital.com/hs-fs/hubfs/_Website/Logos/Web-Color2.png?width=738&name=Web-Color2.png "Merchant Cash Advances")](https://www.quikstonecapital.com/) # Merchant Cash Advance Blog # What is the true cost of your merchant cash advance? Posted by [Karen Erdelac](https://www.quikstonecapital.com/merchant-cash-advance-blog/author/karen-erdelac) on Aug 13, 2015 - [Tweet](https://twitter.com/share) ![5_merchant_cash_advance_questions1](https://www.quikstonecapital.com/hs-fs/hub/311686/file-1149843909.jpg?width=285&name=file-1149843909.jpg "5_merchant_cash_advance_questions1") So you decided to grow your business. Perhaps, you would like to replace some old equipment. You tried to get a loan from your bank but the bank didn’t seem to be interested in providing a line of credit or a small business loan. You searched the internet and discovered something called a “merchant cash advance”. Through Quikstone Capital Solutions, you secured a merchant cash advance in the amount of $20,000 with a total payback of $25,000. You are paying back the advance by having a percentage of your credit card processing deducted and applied towards your balance due. Then out of nowhere a “bank” calls you offering a “business loan.” The “bank” tells you that you qualify for $100,000 and you’ll have 12 months to pay off your “loan”. However, in order to qualify, you’ll need to pay off Quikstone Capital Solutions. The “bank” tells you that the cost of the $100,000 is going to be 25% but, not to worry since you’ll have 12 months to pay. It does occur to you that you don’t really need $100,000. But, there’s a very quick list of projects you would really like to get accomplished. Hey…you might as well get these things done since you’ve suddenly got access to all this cash. This is the moment when you as a Business Owner, need to stop and ask yourself two important questions: 1. If this is a “business loan” why am I being required to pay off Quikstone Capital Solutions? 2. How much is this “business loan” really going to cost me? You’re being required to pay off Quikstone Capital Solutions because your “business loan” is really a merchant cash advance which is being packaged and sold to you as a “loan”. Since the collateral for a merchant cash advance is your cash flow and since your credit card processing is part of your cash flow the “lender” doesn’t want to share that collateral with Quikstone Capital Solutions.  How much is this “business loan” really costing you? Let’s examine some numbers: The amount of the “business loan” $100,000 Cost of the “business loan” at 25% $25,000 Origination fee $2,000 Amount you owe to the “bank” $127,000 Balance owed to Quikstone Capital Solutions $20,000 (*Assume $5k has been paid*) Amount of funds you actually receive $80,000 Actual cost of the money **$47,000** ![loan cost](https://www.quikstonecapital.com/hs-fs/hub/311686/file-1963166324.jpg?width=287&name=file-1963166324.jpg "loan cost") How is that possible? Well here’s how this process usually works: You took that $20,000 merchant cash advance from Quikstone Capital Solutions and you spent that money on things you needed such as supplies or advertising. That money is gone. You invested wisely but the money is gone. The $20,000 cost you a $5,000 advance fee and that worked for you because your payments were a percentage of credit card sales. If your sales went up then you paid quickly. If your sales went down then you paid slowly. Remember, since that “business loan” uses credit card sales as collateral, you have to pay Quikstone Capital Solutions that balance at the time the “business loan” is completed, and not as a percentage of sales. The remaining balance is paid as a LUMP SUM. That advance fee which was going to be paid back to Quikstone Capital Solutions is now all due at once. Suddenly, that $100,000 business loan is $80,000 and those weekly payments which will run about $2,500 don’t sound so good. What if you have a slow week? The $2,500 will still be due and if there are insufficient funds in your account, there will be fees associated with that, in addition to what your bank charges you. Most of us have heard the old adage “if it’s too good to be true…then it probably is.” Don’t be taken advantage of by lenders who offer you a “business loan” and pretend to be a “bank.” If the bank you have your business checking account wouldn’t loan you money, ask yourself why this “bank”, offered you $100,000? It’s most likely because they aren’t really a bank. They are a merchant cash advance company masking themselves as a bank. Yes, that offer is too good to be true. If you are paying $47,000 for a cash payment of $80,000, then you are paying approximately 58% for the use of that $80,000 in fees or whatever the “bank” is calling the cost of the money. Your project must be very profitable to make this a good deal for you. Is money that expensive the sort of funding your business needs? Take a step back and consider the costs and risks. We believe in most cases your answer will be no. We are always available for a no obligation analysis of your options. [Quikstone Capital Solutions](https://www.quikstonecapital.com/apply-for-merchant-cash-advance) provides business cash advances for all the things a business needs.  Call today to discuss your business plans (866) 456-5638. 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