A factor rate is the number every MCA funder quotes — and almost nobody explains. A 1.35 factor rate on $50,000 means $67,500 in total payback, but that number alone doesn't tell you whether the offer is fair, what it will cost you per day, or how it compares to the quote sitting next to it. This calculator turns any offer's factor rate into the three numbers that actually matter.
*APR-equivalent uses the simple formula ((factor rate − 1) × 365 ÷ term in days) × 100. It is a comparison estimate — it does not compound, and it ignores fees other than the origination fee above. Daily payments assume ~21 business days per month; weekly payments assume ~4.33 weeks per month. Your final terms are whatever the written funding agreement says.
How to use this calculator
Pull the numbers straight off each offer sheet and enter them above. Run every quote you receive through the same inputs — the calculator does the one thing salespeople rarely do: put every offer in the same currency.
- Funded amount — the gross advance on the offer sheet, not the deposit.
- Factor rate — the multiplier the funder quoted (for example 1.35).
- Term length — how many months the payback stretches over.
- Origination fee — if a percentage is deducted from your funding, enter it here; it comes out of what you receive, not out of what you repay.
Then read the three comparison numbers: total payback (the dollars leaving your business), estimated payment (the daily or weekly hit to your cash flow), and APR-equivalent (the honest apples-to-apples cost). For the full manual checklist behind these numbers, see our guide on how to compare MCA offers.
What a factor rate actually is
A factor rate is a cost multiplier, not an interest rate. The funder multiplies your funded amount by the factor rate to get your total repayment. A $50,000 advance at 1.35 means $67,500 in total payback — the $17,500 difference is the cost of capital. For the full breakdown with more examples, read what a factor rate is and why it's different from APR.
The catch: factor rates ignore time. A 1.40 factor over 6 months and a 1.40 factor over 12 months cost the same number of dollars — but the 6-month version is roughly twice as expensive in APR terms, and its daily payment is double. That is exactly why the calculator converts everything to an APR-equivalent.
The same factor rate can cost you twice as much
Three offers, same $50,000 funding need. Watch what happens when factor rate and term move against each other:
| Offer | Factor rate | Term | Total payback | Est. daily payment | APR-equivalent |
|---|---|---|---|---|---|
| Offer A | 1.40 | 6 months | $70,000 | $538 | ~80% |
| Offer B | 1.40 | 12 months | $70,000 | $269 | ~40% |
| Offer C | 1.30 | 6 months | $65,000 | $500 | ~60% |
Offer C quotes the lowest factor rate — and costs more in APR terms than Offer B. A borrower comparing factor rates alone would pick C and pay the equivalent of ~60% APR instead of ~40%. This is the most expensive mistake in MCA shopping, and it takes ten seconds with the calculator above to avoid. (Illustrative numbers — your quotes will differ.)
5 things the calculator can't see on the offer sheet
The numbers above are only as honest as the offer sheet. Before you sign, get these five in writing:
- The net deposit. Origination fees are usually deducted from your funding, not added to the payback — a $50,000 advance with a 3% fee puts $48,500 in your account while you still repay the full $50,000. The calculator above adjusts for this.
- Early-payoff terms. Most MCAs charge the full payback even if you pay early — there is rarely a discount for settling in month four of a nine-month term.
- Renewal and stacking rules. Many funders let you renew or take a second advance mid-term, which can quietly layer a new cost on top of the old one. See our guide on MCA stacking before you say yes to either.
- Daily ACH vs. percentage holdback. Fixed daily payments are predictable but unforgiving in a slow week; a holdback flexes with your card sales. Two identical paybacks can feel completely different on cash flow.
- The security language. Ask whether the agreement includes a confession-of-judgment clause or a UCC lien on your business assets. Neither makes an offer good or bad — but you should never discover them after signing.
From numbers to a real offer
A calculator tells you what an offer costs; it can't tell you whether you could have gotten a better one. That's a shopping problem, not a math problem — and it's why running one quote through the tool above is only step one. If the numbers look expensive, get a competing written offer before you sign: a second quote is the most effective negotiating leverage in this market.
Frequently asked questions
What is a factor rate on a merchant cash advance?
A factor rate is the multiplier a funder applies to your advance to set total repayment. A $50,000 advance at a 1.35 factor rate means $67,500 in total payback. It is not an interest rate — it ignores time, which is why two offers with similar factor rates can have very different true costs.
What is a good factor rate in 2026?
Roughly 1.15–1.25 for strong borrowers, 1.25–1.40 for typical MCA borrowers, and 1.40–1.55 for challenged credit or restricted industries. But a factor rate only makes sense with its term — a 1.30 factor over 6 months can cost more in APR terms than a 1.40 factor over 12 months.
How do I convert a factor rate to an APR?
Use the simple approximation: ((factor rate − 1) × 365 ÷ term in days) × 100. A 1.40 factor over 9 months (274 days) works out to about 53% APR-equivalent. This ignores fees and compounding, so treat it as a comparison estimate, not a precise disclosure.
Does this calculator include fees?
It accounts for an origination fee, which most funders deduct from your funding (raising your effective cost on what you actually receive). It does not include NSF fees, wire fees, or lockbox charges — get every fee in writing before you sign.
Is the calculator result a funding offer?
No. It is an educational estimate based on the numbers you enter. Your actual terms are whatever the written funding agreement says — always compare the final numbers on paper, not on a sales call.
Why is the daily payment higher than I expected?
Most MCAs collect through fixed daily ACH withdrawals on business days, so a $67,500 payback over 9 months means roughly $346 every business day. Total cost and cash-flow feel are two different things — a cheap-looking total can still strangle a slow week, which is why the calculator shows both.
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