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.
- Cost of the advance
- $15,000
- Each remittance
- $515.87 × 126 business days
- Cost as a share of the amount
- 30%
- APR-equivalent
- 109.3%
- Naive annualised factor
- 60%
- You actually receive (after fee)
- $50,000
A bank term loan on the same $50,000 over 6 months at 12% APR would cost about $1,770. The advance may still be the right tool for a short, high-margin use a bank will not fund in time — the point is to see both numbers first.
Illustrative, not an offer. The terms that apply to you are only those in an agreement you sign. How this is calculated.
The working
Purchased amount = amount × factor rate. Cost = purchased amount − amount. Each remittance = purchased amount ÷ number of remittances, where a month has 21 business days, 4.33 weeks or 1 monthly payment.
APR-equivalent is the annual rate a level-payment loan would need so that the same remittances, on the same schedule, repay the amount advanced — solved for the periodic rate and multiplied by the number of periods in a year, the way a loan's APR is quoted. It is higher than the naive "cost × 12 ÷ months" figure because you do not hold the full amount for the full term.
Fee: if a funder deducts an origination fee, you receive less than the amount but remit the same purchased amount; the calculator shows the net you receive and prices the cost against it.
The bank comparison uses 12% APR, the middle of the 8–14% range qualified borrowers see on bank term loans, amortised monthly over the same term.
What is a factor rate?
The multiplier an advance uses to set what you remit: amount × factor rate = purchased amount. A 1.30 factor on $50,000 means $65,000 back, a cost of $15,000. It is fixed at signing and does not fall if you remit early, unless the agreement includes an early payoff discount.
Why is the APR-equivalent so much higher than the factor rate suggests?
Because the term is short and the balance is repaid as it goes. A 30% cost over six months is 60% a year on paper, but you do not hold the full $50,000 for six months — you remit part of it every business day. The rate a loan would need to produce the same payments over the same schedule is the APR-equivalent: about 109.3% in the example.
Does paying early save money on a merchant cash advance?
Not by default. The purchased amount is fixed, so finishing in four months instead of six costs the same in dollars and raises the APR-equivalent. Early payoff discounts — 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?
First-position advances usually fall between 1.15 and 1.45. Shorter terms, weaker deposits, negative days, existing positions and higher-risk industries push the number up. Above 1.49 deserves a second opinion and a comparison with every alternative on the table.
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.