Funding repaid from a small share of your daily card sales.
Credit card factoring — closely related to merchant cash advance — gives you a lump sum upfront and collects repayment as a small percentage of each day’s card processing.
What credit card factoring is
Credit card factoring is a financing arrangement where a funder advances you a lump sum in exchange for a percentage of your future credit card sales. It’s essentially a merchant cash advance routed through your card processor — each batch settles minus a small holdback that goes to repayment.
Because repayment scales with card volume, slow days cost you less. Because it’s backed by predictable card processing, qualification depends almost entirely on processing volume, not personal credit.
Best suited for businesses with consistent credit card sales — restaurants, retail, hospitality, services — that need fast access to capital and can absorb a percentage of daily card revenue going to repayment.
How credit card factoring works
You apply with 4–6 months of processing statements. The funder analyzes your average daily card volume, then offers an advance amount with a factor rate (typically 1.18–1.40) and a holdback percentage (8–15% of daily card receipts).
After you accept, funds deposit to your business account within 24–72 hours. Repayment runs automatically: your processor splits each settlement and routes the holdback to the funder, while the rest flows to you normally.
When the total advance plus the factor is repaid, the holdback stops. Many businesses renew or stack repeat advances — we strongly encourage you to think carefully before doing so, since stacking is the most common cause of cash flow failure.
What to weigh before you apply.
Pros
- Repayment scales with card sales — lighter on slow days
- Approval based on processing volume, not personal credit
- Fast funding, often within 24 hours
- No fixed monthly payment to break during a downturn
Cons
- Higher cost of capital than traditional loans or lines of credit
- Only works for businesses with consistent card sales
- Daily holdback affects daily cash flow
- Stacking multiple advances simultaneously is risky
How it stacks up against other funding products.
Questions before you apply.
Is this the same as a merchant cash advance?
Functionally yes — both advance you a lump sum and repay from card sales. The main difference is mechanics: credit card factoring routes through your processor at the batch level; a traditional MCA debits your bank account daily. The economics are similar.
Will I need to switch processors?
Some funders require you to switch to a partner processor. Others can attach to your existing processor via a third-party tri-party agreement. We surface what each funder requires before you commit.