Knight Capital provides merchant cash advances. Under this arrangement, Knight Capital forwards you a lump sum, and you agree to repay the amount out of a percentage of your future earnings. Since your future earnings will cover your debt, this allows Knight Capital to extend credit to businesses even if the owner has a low credit rating.
Knight Capital cash advance offers feature:
- Amounts from $5,000 to $250,000, according to third-party reviewers
- 60 to 260 days to repay cash advances
- Factor rates (rather than interest rates) averaging 1.19 to 1.40, meaning you repay 19% to 40% on top of the amount of your advance
- Origination fees of up to 2.5%, according to third-party reviewers
- Repayments automatically are drawn daily on business days
In contrast to many conventional lenders, Knight Capital uses factor rates instead of interest rates. This means that instead of repaying an interest-based amount that can vary with the amount of principal you still owe, you get charged a flat fee based on a multiplier or percentage of the amount you borrow.
For instance, if you receive a cash advance of $100,000 at a factor rate of 1.20, you must repay an additional 20% of the amount you borrow, so that your total debt is $120,000 (plus any other fees such as origination fees). Knight Capital Funding factor rates average 19% to 40%.