The business-funding reference
Every funding option, costed side by side. Then your call.
Factor rates in dollars. APR-equivalents next to every quote. The terms agreements actually use, defined. Read first; apply only if the numbers make sense for your business.
- Costs shown as dollars and APR-equivalent
- Banks and alternatives on the same table
- Written for owners, reviewed against current agreements
$50,000 at 1.30, 6 months$65,000remitted in total
Cost in dollars$15,000$516 a business day
APR-equivalent109.3%not the 30% it sounds like
Same money, bank at 12%$1,765if a bank says yes in time
At a glance
Full comparison →What business funding costs, by option
| Option | Typical cost | Speed | When it fits |
|---|---|---|---|
| Merchant cash advance | Factor 1.15–1.45 → roughly 40–150% APR-equivalent | 1–3 days | A short, high-margin use that cannot wait on a bank; owners banks have declined |
| Revenue-based financing | Cap of 1.2–1.6× the amount | 3–7 days | Seasonal or fast-growing businesses whose payments should move with sales |
| Business line of credit (bank) | Prime + 1–5%, roughly 9–14% APR | 1–4 weeks | Recurring gaps; the cheapest flexible money a qualified business can hold |
| Online line of credit | Roughly 20–60% APR | 1–3 days | A credit line when the bank's timeline or minimums do not fit |
| Bank term loan | Roughly 8–14% APR | 2–8 weeks | Planned investments with time to qualify; the lowest cost short of SBA |
| SBA 7(a) loan | Prime + 2.25–4.75%, roughly 10–14% APR | 30–90 days | The largest, longest, cheapest capital a small business can reach, when the timeline allows |
| Equipment financing | Roughly 7–20% APR | 2–10 days | Buying equipment: the asset secures the deal, so it prices well below unsecured capital |
| Invoice factoring | 1–5% of the invoice per month outstanding | 1–3 days after setup | Businesses that wait 30–90 days to be paid by solid customers |
Costs are typical ranges for U.S. small businesses as of this page's update date, not offers. APR-equivalents for advances assume a daily remittance over the stated term; see the factor rate calculator for the arithmetic.
Calculators
Turn a quote into dollars
Calculator
Open the calculator Factor rate calculator
Turn an advance quote — amount, factor rate, term, remittance schedule — into total payback, the cost in dollars, the daily or weekly remittance and the APR a loan would need to cost the same.
Calculator
Open the calculator How much can I qualify for?
An estimated funding range from average monthly revenue, time in business, open positions and credit band — the way an underwriter sizes a first look.
Comparison table
Compare the options 8 options, one table
Typical cost, speed, term, what each needs and when each fits — banks, SBA and advances side by side.
Glossary
Glossary A–Z →The words in the agreement
- APR-equivalent
- The annual percentage rate a loan would have to carry to cost the same as an advance over the same term.
- Average daily balance
- The mean end-of-day bank balance over a month.
- Broker
- An intermediary paid by the funder when a deal closes, usually 8–15% of the amount, which the factor rate absorbs.
- Business line of credit
- A revolving limit you draw on as needed and pay interest only on what is outstanding.
- Confession of judgment
- A signed admission that lets a funder enter judgment without a trial if the merchant defaults.
- Default
- Any event the agreement names — bounced remittances, a changed bank account, a new position when forbidden.
- Early payoff discount
- A reduction of the purchased amount if the balance is paid within a window, typically 10–25% of what remains.
- Equipment financing
- A loan or lease secured by the equipment itself, which usually means a lower rate and a term matched to the asset's life.
- Factor rate
- The multiplier that sets what an advance costs: amount × factor rate = purchased amount.
- Holdback
- The share of each day's card sales a split-funded advance keeps — typically 8–20% — until the purchased amount is delivered.
- Invoice factoring
- Selling unpaid invoices to a factor for 70–90% up front and the rest, minus a fee of 1–5% per month outstanding, when the customer pays.
- Merchant cash advance
- A purchase of a fixed amount of a business's future receivables at a discount: a lump sum now, remitted daily or weekly until the purchased amount is delivered.
Questions owners ask
Plain answers, then the detail
Every explainer on this site opens the same way: the short answer, then the detail.
Is a merchant cash advance a loan?
No. An MCA is a purchase of a fixed amount of your future receivables at a discount: you receive a lump sum now and remit a set daily or weekly amount, or a percentage of card sales, until the purchased amount is delivered. Because it is not a loan there is no interest rate; the cost is the difference between what you receive and what you remit, expressed as a factor rate — and that factor rate is only comparable to a loan once it is converted to an APR-equivalent over the same term.
How do I compare a factor rate with an interest rate?
Convert both to dollars over the same months, then to APR. A $50,000 advance at 1.30 over six months costs $15,000 — about 109% APR-equivalent on a daily remittance. A bank term loan at 12% APR on the same $50,000 over six months costs about $1,770. The advance may still be the right tool for a short, high-margin use the bank will not fund in time; the point is to see both numbers before choosing.
When is a bank the better choice?
When it will say yes inside your timeline. Bank term loans and lines of credit cost a fraction of an advance; SBA 7(a) loans less again. If you have two years in business, a 680+ score and clean financials, start there. Alternatives earn their cost when the opportunity or the gap will not wait, or when a bank has already said no.
What do funding partners look at?
Deposits first: three to six months of business bank statements, average daily balance, negative days and existing positions. Time in business and the owner's credit band set the range; the statements set the number. No tax returns are needed to see options from most advance and revenue-based programs.
Does reading or applying affect my credit?
Reading does nothing. Starting a request does not pull credit. If you move forward with a specific offer, the funding partner may run a soft or hard inquiry and you are told which before it happens.
How is this site paid?
TermLantern is compensated by a funding partner when a request it refers is funded. Readers never pay to read, to apply, or to receive options. We say so on every page that leads to the application, and we publish the cases where the right answer is a bank, a line of credit or waiting a quarter.
Ready to see what your numbers come back as?
One request, three months of statements, options from our network of funding partners in plain dollars — or an honest note that a bank is your better route.