Four Small-Business Trends Canadian Owners Should Act On

· By Avi Bernstein, CEO, 2M7 Financial Solutions

Merchant cash advances aren't priced like bank financing, so their cost can be hard to compare. There's no annual interest rate. Instead, the funder applies a factor rate to the amount you receive to calculate the total repayment, and that total is set before you sign. The cost of capital is the total repayment minus the advance.

2M7 Financial Solutions is a Canadian direct funder of merchant cash advances. At 2M7, the cost of an advance is a fixed dollar amount agreed before you sign. Multiplying the advance by the factor rate gives the agreed total repayment, before any eligible early payoff discount. Factor rates at 2M7 typically fall between 1.18 and 1.48, so a $50,000 advance has an agreed total repayment between $59,000 and $74,000 and a cost of capital between $9,000 and $24,000.

The agreed cost does not grow while the advance is outstanding, and no interest accrues. The factor rate you're offered depends on the funding amount, how long the business has operated, its monthly revenue and its industry.

The repayment option you choose affects your daily cash flow, and an eligible early payoff can reduce the total cost. Both are covered below, with worked examples for a restaurant, a construction company and a retailer. All dollar amounts are in Canadian dollars.

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How do you calculate merchant cash advance costs?

Start with the amount you receive, the total you will repay and the payment coming out of your account. A factor rate is the multiplier used to calculate total repayment. Subtract the advance from that total to get the cost of capital.

Agreed total repayment = Advance × Factor rate

Cost of capital = Agreed total repayment − Advance

With fixed payments, the same amount is paid automatically each business day, and you can call 2M7 to ask about reducing it if revenue drops. Your offer states the payment amount.

With flex payments, the payment is a share of the revenue deposited into your business account each day.

Flex daily payment = Daily revenue × Holdback percentage

The holdback percentage at 2M7 typically ranges from 4% to 30%, depending on the funding amount, revenue and industry. The percentage stays the same and the dollar amount moves with your daily revenue.

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What a $50,000 advance costs

On a $50,000 advance, a factor rate of 1.18 means $9,000 in cost of capital. At 1.48, that cost is $24,000.

Agreed totals are before any eligible early payoff discount. Your offer shows the exact factor rate and agreed total repayment in dollars before you accept it.

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Three worked examples

Illustrative examples, not offers. Factor rates and holdback percentages are within 2M7's published ranges, and agreed totals are before any eligible early payoff discount.

Restaurant. The owner replaces a range and a walk-in cooler. On a day with $3,000 in revenue, $300 goes to repayment. If a slow week drops revenue to $2,000 a day, the payment drops to $200 and repayment takes longer. Changes in sales do not change the agreed $65,000 total. An eligible early payoff can reduce it.

Construction company. A contractor has to buy materials weeks before the client's first progress payment. Revenue arrives in large, irregular deposits rather than steady daily income. This illustration uses fixed payments: the contractor pays the same amount automatically each business day and can call 2M7 to ask about reducing it if a client payment arrives late.

Retailer. A store stocks up in October for the holiday season. In December, daily revenue climbs to $5,000 and the payment rises to $400, so the advance is repaid faster during the busiest weeks. In a quiet January, the payment falls with revenue.

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Fixed or flex payments: the same advance two ways

Here is the restaurant's $50,000 advance at 1.30 under each option. For this illustration, both options use the same factor rate and the same agreed total repayment of $65,000, before any eligible early payoff discount.

With fixed payments, the daily amount is the same each business day, which some owners find easier to plan around. With flex payments, the dollar payment decreases when daily revenue falls and increases when it rises.

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Does paying early save money?

At 2M7, an eligible early payoff receives a 10% discount on the remaining balance when the account is in good standing and the payment comes directly from your business, not from another funder. Not every funder offers an early payoff discount, so when you compare offers, ask whether paying early changes the amount owed.

Take the restaurant again. It has repaid $40,000 of its $65,000 agreed total, leaving $25,000. An eligible early payoff earns $2,500 off, so the owner pays $22,500 instead. The advance's total cost drops from $15,000 to $12,500.

Ask your funding specialist for the payoff amount and the saving at your current balance.

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Factor rate vs APR

A factor rate is not an interest rate. It tells you the total repayment relative to the advance. It does not, by itself, tell you the annualized cost, which also depends on the timing and amounts of payments.

The same factor rate can represent different annualized costs depending on how quickly the advance is repaid, even when the dollar cost stays the same. With flex payments, repayment speed follows your sales.

When you compare offers, compare the agreed total repayment, the effect on daily cash flow and any savings available for an eligible early payoff. Ask for those figures in writing before you accept an offer.

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Does 2M7 charge fees beyond the factor rate?

Beyond the cost of capital, 2M7 charges no application, origination, underwriting, documentation, brokerage, servicing, maintenance, renewal or early repayment fees, and no collateral is required. 2M7 does charge a fee when a scheduled payment is returned.

Not every funder prices this way. When you compare offers, check the amount you will actually receive, the agreed total repayment and any separately stated charges.

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Frequently asked questions

What is a factor rate?

A factor rate is the multiplier used to calculate the total repayment of a merchant cash advance. Subtract the advance from that total to get the cost of capital. At 2M7, factor rates typically range from 1.18 to 1.48.

What is a holdback percentage?

With flex payments, the holdback is the share of the revenue deposited into your business account each day that goes toward repayment. At 2M7 it typically ranges from 4% to 30%. A 10% holdback on $3,000 in daily revenue is a $300 payment.

How much will I pay back on a $50,000 merchant cash advance?

At 2M7's typical factor rates, the agreed total repayment is between $59,000 and $74,000, before any eligible early payoff discount. Your offer states the exact total before you accept it.

Does a merchant cash advance cost more than a bank loan?

Usually, yes, for a business that qualifies for a bank loan. A merchant cash advance trades a higher cost for speed, repayment that can follow your sales, and an approval that weighs revenue alongside credit. Bank financing often takes longer and asks for more documentation. At 2M7, the cost is a fixed dollar amount agreed before you sign, no interest is charged and no collateral is required.

What are 2M7's minimum eligibility requirements?

2M7's minimum eligibility requirements are a Canadian business operating for at least 3 months, at least $15,000 a month in revenue and no open bankruptcies. Credit score is considered alongside revenue, so a low score does not automatically rule a business out. Meeting the minimums does not guarantee approval.

How quickly does the money arrive?

Approval decisions typically come within 1 business day, and funds are typically deposited within 24 hours of approval.

See what your advance would cost

Ask a 2M7 funding specialist for your factor rate, agreed total repayment, daily payment or holdback percentage, and early payoff conditions in writing before you accept an offer.

Check If I Qualify

Cash flow is the kind of problem that feels personal. You know your business is generating revenue. You know invoices are out. And yet the bank account tells a story that doesn't match the one in your head.

This is one of the most common situations Canadian small business owners find themselves in, and it has nothing to do with whether the business is viable. It has to do with timing. Money moves out before it moves back in, and in the gap between those two things, businesses that are technically profitable can still feel like they're barely keeping pace.

The good news: this is a solvable problem. Here's what actually works.

1. Stop Waiting to Invoice

The fastest way to tighten your cash cycle is to close the gap between when work is done and when the invoice goes out. Many business owners batch invoices at the end of the month out of habit. That habit costs you weeks of float every billing cycle.

Send the invoice the day the job is done, the product ships, or the milestone is reached. Most accounting software (QuickBooks, FreshBooks, Wave) lets you automate this. If you're still sending invoices manually, that's worth fixing too, but start with the timing.

While you're at it, look at your payment terms. Net-30 is standard, but it's a convention rather than a requirement. Many businesses successfully shift to Net-15 or even Net-7 for certain clients. Some add a small early payment discount of 1–2% to make faster payment genuinely attractive. Over the course of a year, shortening your average days outstanding has a real impact on how much cash you have available at any given time.

2. Get Serious About Receivables

Sending the invoice is step one. Collecting on it is the step most businesses handle inconsistently.

Pull your accounts receivable aging report. If you don't know where to find it, it's in your accounting software, which shows every outstanding invoice sorted by how long it's been unpaid. According to a Stripe analysis of 250,000 invoices, an invoice that remains unpaid past 90 days has only an 18% chance of being collected. Anything past 45 days deserves a phone call, not another email. Anything past 60 is a cash flow problem, not just an administrative one.

A few things that help:

• Follow up within 3 days of an invoice going past due, not 30
• Accept multiple payment methods, because the easier you make it to pay, the faster people pay
• For clients with consistently slow payment patterns, consider requiring a deposit before work starts
• For large project-based work, build milestone payments into the contract so you're not waiting until completion to see money

None of this is aggressive. It's running your business like the cash matters, because it does.

3. Negotiate Your Payables Without Burning Relationships

Most business owners put more energy into speeding up what comes in than managing what goes out. Both sides of the equation matter.

Talk to your suppliers. If you have a solid payment history with them, many will extend your terms from Net-30 to Net-45 or Net-60 without much pushback. That extension alone can give you meaningful breathing room when you're waiting on a large receivable. Some suppliers also offer a discount for early payment. That discount is worth taking when you have cash and worth skipping when you don't.

The same principle applies to equipment and asset purchases. Outright purchases wipe cash immediately. Leasing or financing that equipment spreads the cost over time and preserves working capital for things that are harder to finance, like payroll, inventory, and operating costs that don't come with payment terms attached.

This isn't about avoiding payment. It's about aligning when money goes out with when money comes in.

4. Know Your Cash Cycle, Not Just Your Profit Margin

Your income statement tells you whether your business model is working. Your cash flow statement tells you whether your business will survive long enough to prove it.

As QuickBooks Canada notes, without proper cash flow management, even profitable businesses can face serious obstacles. The two statements can tell completely opposite stories at the same time because revenue is recorded when it's earned, not when it's collected. If you invoiced $80,000 last month on Net-60 terms, that $80,000 does not exist as cash yet.

Understanding your cash conversion cycle, which is how long it actually takes from the first dollar spent to getting paid, gives you the visibility to plan ahead. A retailer buying inventory before a peak season, a contractor fronting materials before a draw payment, a service business billing at month-end and chasing payment for 45 days: each of these has a predictable cycle. Once you know yours, you can anticipate the gaps instead of reacting to them.

A 13-week cash forecast sounds like something only larger companies bother with. It isn't. Even a rough projection of what's coming in and going out over the next quarter gives you enough lead time to act before a shortfall becomes a crisis.

5. Use Working Capital as a Tool, Not a Last Resort

Here's a shift in thinking that changes how a lot of business owners operate: external capital isn't only for emergencies. For businesses where the cash cycle is structurally long, where spending always precedes earning, a working capital facility is a sign of clarity rather than distress.

The business owners who handle cash flow best tend to have financing in place before they need it. Not because they're struggling, but because they know a real opportunity won't wait for a bank's approval timeline.

For Canadian small businesses that don't meet the documentation requirements of the Big 5 banks, or simply can't wait weeks for an answer, a Merchant Cash Advance works differently. Rather than borrowing against credit history or collateral, you're accessing capital against your future revenue. Repayment comes as a percentage of daily sales, so it flexes with how your business is actually performing. Strong month? It pays down faster. Slow stretch? The repayment eases automatically. For a closer look at how this type of funding fits a growing business, read how a merchant cash advance supports a growing business.

At 2M7, the approval process is built around your current business performance: your bank statements, your revenue trends, your cash flow. Not a credit score from two years ago. Businesses operating for at least 3 months with at least $15,000 per month in revenue can apply with just three documents (bank statements, a photo ID, and a void cheque), and can be approved within 24 hours with funds deposited the same day. If you want to understand what that might look like for your situation, the conversation starts here.

The Real Problem Isn't Cash. It's Timing.

Most cash flow problems aren't evidence that something is broken. They're evidence of a gap between when you earn and when you collect. It's one of the oldest tensions in business, and every business owner confronts it eventually.

The ones who handle it best aren't necessarily the ones with the most cash on hand. They're the ones who understand the cycle, manage it deliberately, and know what tools are available when the gap needs bridging.

If you're working through a cash flow challenge right now, or you want to get ahead of one before peak season hits, 2M7 works with Canadian small business owners at exactly this stage.

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2M7 Financial Solutions is honoured to be featured in this month’s CanadianSME Small Business Magazine, with an interview highlighting small business financing advice from 2M7’s CEO, Avi Bernstein. From his insights on the state of the lending landscape, to his expertise on the challenges facing small businesses today – Avi provides insider advice on alternative lending options that can help small businesses secure the funding they need to operate and grow their business.

In the interview, CEO Avi Bernstein discusses the many factors that traditional lenders use to evaluate whether a business qualifies for a loan, and why this digital credit score algorithm method of evaluating businesses, is increasingly resulting in small businesses being denied funding from lenders such as banks and credit unions.“

Rapid shifts in new technologies, increased competition, and the state of the economy have led to an increased need for financing, but it is becoming increasingly more difficult from small businesses to access funding from traditional lenders,” said Avi, when asked about the challenges that small businesses face when it comes to securing funding. “Most small businesses need loans to bridge the gaps during uncertain times such as these, but small business owners continuously struggle to secure working capital.”

For over a decade, 2M7 has been dedicated to leveraging its expertise in the Canadian lending landscape to help as many small businesses as possible to get access to the working capital they need. This dedication has led to the development of a proprietary algorithm which uses a unique approach to evaluate risk and determine credit worthiness – enabling 2M7 to fund businesses that might not otherwise qualify for a traditional loan.

Furthermore, the 2M7 team strives to provide an alternative lending solution that better meets the needs of small Canadian businesses than traditional loans. With minimal requirements and simple terms, 2M7 has designed a straight-forward borrowing option that essentially provides small business owners with a cash advance that is deposited directly into their bank account within 24-48 hours, to use immediately within their business as they see fit.2M7 Financial Solutions continues to be at the forefront of the innovative technologies and processes that are transforming the Canadian financial industry in order to help grow the small businesses that are the backbone of our economy. As the industry continues to evolve, the 2M7 team is committed to continuously improving its flexible funding solutions and working closely with small business owners to better meet their changing needs.

To read the full interview, click here to open page 37 of this month’s digital edition of CanadianSME Small Business Magazine.