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Deal Structuring Calculator

Find the optimal funding amount, factor rate, and term to maximize merchant affordability and your commission.

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What Is Deal Structuring?

Deal structuring is the process of calibrating the funded amount, factor rate, holdback percentage, and term length to create a deal that the merchant can comfortably repay while generating appropriate returns for the funder and commission for the broker. A poorly structured deal -- one that overextends the merchant's cash flow -- leads to defaults, clawbacks, and damaged relationships. A well-structured deal produces a smooth repayment, a satisfied merchant who renews, and a clean portfolio for the broker. The best brokers think of deal structuring as a three-way optimization: merchant affordability, funder risk appetite, and broker profitability, in that order of priority.

How to Use This Calculator

Start with the merchant's actual need

Ask the merchant what they need the capital for and how much. Do not assume bigger is better. A merchant who needs $50K but gets $100K ends up over-leveraged.

Set the max holdback tolerance

Based on the merchant's operating margin and fixed costs, determine the maximum percentage of daily revenue they can divert to MCA payments without straining operations.

Review the structured recommendation

The calculator works backward from the holdback tolerance to suggest the optimal funded amount, term, and daily payment that keeps the merchant in the green zone.

Key Concepts

Affordability Threshold

The maximum daily payment a merchant can sustain without impacting operations. Generally 12-18% of daily revenue for healthy businesses, lower for margin-thin industries like restaurants.

Term Optimization

Shorter terms mean higher daily payments but lower total cost. Longer terms ease daily burden but increase total repayment. The optimal term balances affordability with total cost of capital.

Reverse Engineering

Starting with the payment the merchant can afford and working backward to determine the maximum fundable amount. The opposite of the typical approach of maximizing the advance first.

Expert Insights

Structure for the Renewal: The best deal structure is one where the merchant has enough cash flow headroom to grow their business during repayment. A merchant who grows 10-20% during the advance term qualifies for a larger renewal with better terms -- creating a flywheel of increasing deal sizes and commissions for you. Over-structuring kills this flywheel.

When the Merchant Wants More Than They Should Get: Merchants often want the maximum possible advance. Your job is to explain that a right-sized deal costs less, repays faster, and leads to a better renewal. Show them the total cost comparison: a $60K deal at 1.25 costs $15K versus a $100K deal at 1.40 that costs $40K. The extra $40K in funding costs an additional $25K. Is the marginal $40K worth $25K in fees?

Frequently Asked Questions

Start with their stated capital need, verify it against their bank statements, and ensure the resulting daily payment is under 18% of daily revenue. If the need exceeds what they can safely borrow, discuss phased funding or alternative structures like a line of credit.

Neither extreme. The shortest term minimizes total cost but maximizes daily burden. The longest term does the opposite. Target a term that produces a daily burden of 12-15% of revenue -- this typically falls in the 6-10 month range for most merchants.

Present what they do qualify for and explain the path to a larger amount. Often, a successful first position repayment establishes payment history that unlocks a larger renewal in 4-6 months. This reframes the smaller deal as step one, not a rejection.

Results are estimates for educational purposes only. Actual amounts may vary based on your specific financial situation, market conditions, and other factors. This calculator does not constitute financial advice.