Choosing the best ecommerce loan - Is Clearco Marketing Capital right for you?

May 9, 2022

Learn about Clearco Marketing Capital, and what it means for your books and taxes - in words you can understand.

Choosing the best ecommerce loan - Is Clearco Marketing Capital right for you?

Anything can be sold online …

Beauty products, "sex" chocolate, podcast equipment, even the naming rights for a baby. But successfully growing an online business, requires real work and sufficient capital.

The good news is that there are lots of financing options out there for your ecommerce business, you just need to find the right fit for you. This is where we can help.

As ecommerce accounting specialists we have seen the whole gamut of ecommerce loan options - the good, the bad, and the ugly. In this article, we’ll help you learn a bit more about Clearco Marketing Capital, one of the ecommerce funding options for your marketing expenses.

If you're looking for other types of funding, you can also check out our post on Shopify Capital or Amazon Lending

What is Clearco?

Clearco (formerly Clearbanc) is one of the fastest-growing players in the business financing game. Clearco's lending services are similar to a merchant cash advance, which allows you to repay the cash advance with a percentage of your sales.  Clearco offers a few types of products, but we'll be focusing on the most common one - Clearco Marketing Capital for ecommerce.

Clearco Marketing Capital highlights

Clearco Marketing Capital’s main highlights include:

  • Ecommerce focused only
  • Aimed to be used for marketing expenses only
  • Revenue-share based credit that is repaid based on a percentage of revenue on a daily basis
  • Loans range from $10,000 to $10,000,000
  • The cost of the advance is a 12% fee as a fixed flat rate (calculated based on the credit available).
  • You will receive a 6% cashback credit for all eligible marketing spend that you pay through the Clearco Marketing Capital advance, making the effective fee of marketing spend 6%. 
  • In order to qualify for a 6% cashback credit, the marketing spend needs to be for an eligible preferred vendor, such as Facebook, Google Ads, Amazon Ads, MailChimp, or TikTok.
  • You can also request to approve new marketing vendors not already defined in Clearco's system. Once approved, the 6% cashback will also apply to those vendors.
Clearco Balance Sheet


You repay your loan through a revenue share arrangement on a daily basis, with no specific time limit. 

Clearco automatically withdraws the percentage of eligible sales from your bank account until the loan and the fees are paid off.

Eligibility factors

In order to be eligible for Clearco Marketing Capital, you must meet the following criteria:

  • An ecommerce businesses
  • 6+ months of revenue greater than $10k/month from connected sales platform(s)
  • A corporation or limited liability company

Pros and cons of using Clearco Marketing Capital

Let's review Clearco Marketing Capital’s main pros and cons:

What makes Clearco Marketing Capital a unique funding option?

When you’re looking into Clearco Marketing Capital and calculating how much it will cost, you should pay attention to two factors.

It’s a flat and fixed fee no matter how much you use

As mentioned above, Clearco charges a flat and fixed fee instead of interest. 

This fee is fixed no matter how much credit you actually use for marketing expenses or how much time it takes for you to repay the credit. The good news is that you know how much you’ll need to pay Clearco for the ability to borrow. 

But here’s the catch. If you only use a small portion of the credit available to you, the effective rate (the fee’s percentage of the total credit) could end up even higher than 12%. It’s in your interest to make sure that you’re requesting a line that’s close to what you’ll actually need to borrow - or that you’re OK paying for the extra cushion.

The effective fee depends on how you spend your credit

While the fee is fixed according to your credit available, it can change based on potential cashback. 

Here’s where the real “payback” (pun intended) comes in. 

If you use the full amount of credit on marketing spend with eligible vendors, then your fixed fee could end up effectively at 6% based on cashback credits. 

If you put these two factors together, you’ll get the best rates when you use as much of the credit offered to you for marketing spending (hence the name Clearco Marketing Capital). 

Show me the numbers

Let’s walk through two examples to bring these concepts home. 

Let’s say you receive an advance of $50,000.

  • Your fixed 12% fee results in a total repayment amount of $56,000.
  • You spend the entire $50,000 on eligible marketing spend.
  • You get total cashback credits of $3,000. 
  • Your advance of $50,000 will only cost you $3,000 or 6%.

Now, let’s say instead of the $50,000 advance you received, you only spend $20,000. 

  • Of your total spend, $15,000 is for eligible marketing spend and $5,000 is not. 
  • You're fixed fee is still $6,000.
  • You can reduce it by the cashback credit of $900 (6% of $15,000) for a total cost of $5,100. 
  • Your advance of $20,000 will essentially cost you $5,100 or 25.5%.

Obviously, in the first example you’re getting better bang for your buck, but the ultimate value to your business depends on your goals and how much padding you want for your cash flow.

How does Clearco Marketing Capital impact your books?

Time to get a bit more technical. Since Clearco Marketing Capital charges a flat and fixed fee, you should record it differently than traditional interest. Your fee charged by Clearco will most likely be treated as costs for the 'purchase' of a financial product, rather than an interest expense. 

But how you treat this 'purchase' will depend on whether you manage your books under the cash or accrual method of accounting. 

We’ll walk you through what this means and how it will affect you.

Accrual method

On day one of the credit, you should record the full fees as an expense on the income statement. 

On day one, you should also record a corresponding liability on your balance sheet, since you’ll only repay the fees together with the credit repayments. 

If, over the course of the credit, you are entitled to a cashback credit for the eligible marketing spend, the credit will reduce both the expenses on your income statement and the liability on your balance sheet.

Let’s take the same example as above - $50,000 advance with a $6,000 fixed fee and $3,000 cashback credit after spending the advance on eligible marketing spend. For simplicity, let's assume we are repaying the full amount in one month.

When you receive the funds:

  • Increase (debit) your cash by $50,000
  • Increase (debit) your interest and financing fees on your P&L by $6,000
  • Increase (credit) your Clearco Loan on your balance sheet by $56,000 

Each time you repay the loan:

  • Decrease (credit) cash by the repayment amount
  • Decrease (debit) the Clearco Loan by the repayment amount

At the end of the month, you record the cashback credit:

  • Decrease (credit) your interest and financing fees on your P&L by the cashback credit amount of $3,000
  • Decrease (debit) the Clearco Loan by the cashback credit amount of $3,000

Cash method 

If you report on a cash method of accounting, the fees will hit your income statement only at the time of your actual payment, after considering any cashback credits.

Taking the same example as before, when you receive the funds:

  • Increase (debit) your cash by $50,000
  • Increase (credit) your Clearco Loan on your balance sheet by $50,000 

At the end of the month, you record the interest expense:

  • Decrease (credit) cash by the total repayment amount of $53,000 (assuming it was all repaid in 1 month).
  • Increase (debit) your interest and financing fees on your P&L by the portion of the payments that relates to the financing fee. You can use the following formula: Total amount paid in the month x ((financing fee -cashback credit)/total amount owed). In this example, the portion of the financing fees comes out to $3,000 ($56,000 x (($6,000-$3,000)/$56,000)).
  • Decrease (debit) the Clearco Loan by the loan repayment portion of $50,000 (Total repayment amount - financing fees).

Does Clearco Marketing Capital impact your taxes?

The tax treatment for the fees will also depend on whether you file taxes under the cash or accrual method of accounting.

Accrual Method 

The good news is that if you apply the accrual accounting method in your tax return, the total amount of fees should be tax-deductible and reduce your taxable income even before you've actually repaid the full credit. 

This may decrease your actual tax payments. So you can invest the extra cash to grow your business faster. Cashback credits, on the other hand, will increase your taxable income.

Cash Method

If you apply the cash accounting method, the fees should be tax-deductible only when they are actually paid, so you may not benefit from being able to take the full deduction for unpaid expenses. On the other hand, if the entire loan is taken and repaid within the same tax year, there should be no difference for tax purposes. 

Final thoughts about Clearco Marketing Capital

Growing a business can be costly. If you need additional funding to achieve your goals, it's important to find the best fit for your business. Clearco Marketing Capital can be a great option if you plan on using the funds for eligible marketing spend.

How can you evaluate Clearco Marketing Capital against other financing options?

It's important to find the best financing option for your business by comparing one universal rate to understand the real costs of each alternative. While rates and fees are often offered differently from different lenders, you can check out our free ecommerce loan calculator to calculate the annual percentage rate (APR) for your funding options, compare different APRs (e.g., Shopify Capital, Paypal Working Capital), and choose the best option for you!  


About Finaloop

We are a technology company providing automated end-to-end accounting service to ecommerce businesses. Our system connects to your apps, syncs all your data and reconciles your books in real-time, replacing your bookkeeper. We offer reconciled books available 24/7, tax-saving insights, and a single place for all your financial data.

*The information provided on this website does not, and is not intended to, constitute legal advice. All information, content, and materials available on this site are for general informational purposes only. Readers are advised to consult with their attorney or accountant with any questions or concerns.*

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