Factor rate cost calculator
Take an advance quote, with its amount, factor rate, term and remittance schedule, and see the total payback, the dollar cost, the daily or weekly remittance and the APR a loan would have to carry to cost as much.
- 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. Nothing applies to you except the terms written in an agreement you sign. 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 per month.
APR-equivalent is the yearly rate a loan with level payments would carry if the same remittances, paid on the same schedule, were to pay back the amount advanced; you solve for the rate per period and multiply by the periods in a year, just as a loan's APR is quoted. It comes out higher than the simple "cost × 12 ÷ months" figure because you don't have the full 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, so the calculator works out your net and prices the cost against that figure.
For the bank comparison we use a 12% APR, which sits in the middle of the 8–14% that qualified borrowers get on bank term loans, paid down monthly over the same term.
What is a factor rate?
The multiplier that decides how much you remit on an advance: amount × factor rate = purchased amount. With a 1.30 factor on $50,000, you pay back $65,000, so the cost is $15,000. The rate is locked in when you sign and stays the same even if you remit ahead of schedule, unless an early payoff discount is written into the agreement.
How can the APR-equivalent come out so far above what the factor rate implies?
Because the balance gets paid down steadily over a brief term. Paying 30% over six months looks like 60% a year on paper, yet you never have the whole $50,000 for those six months because part of it goes back every business day. The APR-equivalent is the rate a loan would need to generate the same payments on the same schedule, which works out to about 109.3% in the example.
Will I save anything by paying off a merchant cash advance early?
Not by default. Because the purchased amount doesn't change, paying it off in four months rather than six costs the same dollars and pushes the APR-equivalent higher. Discount for paying 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?
A first-position advance typically lands somewhere from 1.15 to 1.45. The number rises with shorter terms, weaker deposits, negative days, existing positions and higher-risk industries. Anything over 1.49 is worth a second opinion and a side-by-side look at every alternative available.
Want to see how your own numbers come out?
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.