Run the numbers on a factor rate
Enter the amount, factor rate, term and remittance schedule from an advance quote to see what you pay back in total, what it costs in dollars, each daily or weekly remittance, and the APR a loan would have to charge to match it.
- Each remittance
- $515.87× 126 business days
- Cost as a share
- 30%
- APR-equivalent
- 109.3%
- Naive annualised
- 60%
- You receive
- $50,000
- Bank loan, 12% APR
- $1,765same amount, same months
Illustrative, not an offer. Only an agreement you put your signature on decides which terms apply to you. How this is calculated.
The working
Purchased amount = the amount multiplied by the factor rate. Cost = the purchased amount minus the amount. Each remittance = the purchased amount divided by the number of remittances, counting 21 business days, 4.33 weeks or 1 monthly payment in a month.
APR-equivalent is the yearly rate a loan with equal payments would have to carry for the same remittances, on the same schedule, to pay off the amount advanced; you solve for the rate per period and multiply by the number of periods in a year, just as a loan's APR is quoted. It comes out higher than the simple "cost × 12 ÷ months" shortcut because you don't have the whole amount for the whole term.
Fee: when a funder takes out an origination fee, the amount you get is smaller but the purchased amount you remit stays the same; the calculator shows your net and prices the cost against that figure.
We model the bank option at 12% APR, the midpoint of the 8–14% that qualified borrowers see on bank term loans, with monthly amortisation over a matching term.
What is a factor rate?
The multiplier that sets how much you remit on an advance: amount × factor rate = purchased amount. With a 1.30 factor, $50,000 turns into $65,000 paid back, so the cost is $15,000. The amount is locked in when you sign and stays the same even if you remit early, unless your agreement has an early payoff discount.
Why does the APR-equivalent come out so far above what the factor rate seems to imply?
Because you pay the balance back as you go, over a short term. On paper, paying 30% over six months works out to 60% a year, yet you never keep the whole $50,000 for those six months, because some of it goes back every business day. In the example, the APR-equivalent comes to about 109.3%, which is the rate a loan would need to produce the same payments over the same schedule.
Will an early payoff on a merchant cash advance lower what I pay?
Not by default. Because the purchased amount doesn't change, paying it off in four months rather than six costs the same dollars but pushes the APR-equivalent up. Discount for paying off earlys — typically 10–25% of the remaining purchased amount within a window — are worth asking for in writing before you sign.
What is a typical factor rate?
For first-position advances, the usual range is 1.15 to 1.45. The number rises with shorter terms, weaker deposits, negative days, existing positions and riskier industries. Anything over 1.49 is worth a second opinion and a side-by-side look at every other option available.
Want to find out what your numbers return?
Send one request with three months of statements and get options from our network of funding partners in plain dollars, or a straight answer that a bank would serve you better.