That funding offer has a price tag they didn’t show you.
“A 1.3 factor rate” sounds like 30% interest. It almost never is — with daily payments over six months, it’s usually the same money as a 100%+ APR loan. Run your offer through the calculator and see the true cost printed, line by line, before you sign anything.
The True-Cost Calculator
EST. v1Your last numbers were restored — saved only in this browser.
This is an estimate for education — not an offer, a quote, or financial advice. We assume equal payments each period and turn the cost into a yearly rate, the same way every other loan is measured. Your contract’s own disclosure is the number that counts. Every offer differs — always read yours.
How we calculate this
We solve for the periodic rate that makes your payment stream worth what you actually received (an equal-payment internal rate of return), then annualize it: 260 payment days a year for daily plans, 52 weeks for weekly. The 109% headline on this page is recomputed live by this same code — nothing is typed in by hand.
Why a “1.3” hides a number like this — Factor rates, decoded
Why “1.3” doesn’t mean 30%
A factor rate multiplies. Borrow $50,000 at 1.3 and you repay $65,000 — that part is simple. The trick is time and speed: you repay it in daily withdrawals over ~6 months, which means you lose the use of the money almost immediately while paying as if you’d kept it.
Funders aren’t always required to show you that number. Since 2026, California requires an APR alongside any quoted price on many commercial financing offers — a rule that exists precisely because this math surprises almost everyone. We show it by default.
Annualize a “30% fee” the way every other loan in America is measured, and it prices out near 109% APR.
The four ways businesses actually get funded
We put all four on the bench. Each has a legitimate use — and a version of the story that sells it too hard. The one-line truth on each:
| Product tested | What it is | The verdict |
|---|---|---|
Merchant cash advanceFastest · costliest |
A lump sum repaid from future revenue via daily or weekly withdrawals. Approvals in 24–72 hours, paperwork-light, credit-flexible. |
Speed is the product, and you pay for it — true annualized cost commonly lands between 60% and 200%. |
Term loanSlower · cheaper |
Fixed amount, fixed monthly payment, stated APR. Banks are cheapest and slowest; online lenders faster and pricier. |
If you qualify (≈1yr+ in business, fair credit, real revenue), this usually beats an MCA by a wide margin. |
Line of creditFlexible |
A limit you draw on when needed and pay interest only on what you use. Best for uneven cash flow, not one-time purchases. |
Watch draw fees and monthly maintenance fees — a “cheap” line can cost plenty at rest. |
SBA loanSlowest · best terms |
Government-backed bank loans with the best rates and longest terms available to small business. |
Weeks to months of paperwork. If your need can wait, it’s worth the wait. |
Check which options fit your business Free · takes ~90 seconds · no credit pull, ever, from us
Read the fine print before it reads you
Plain-English reports from the test bench — no jargon survives editing.
Factor rates, decoded
What 1.2, 1.3, and 1.5 really cost, why daily payments change everything, and the one question to ask any funder.
MCA vs. term loan
The honest decision tree: when speed is genuinely worth the premium — and when it quietly eats your margins.
What funders actually check
The five things underwriters look at before approving you, and what to fix 60 days before you apply.
The True Cost letter
Real offers broken down line by line, funding traps spotted in the wild, and the math your funder hopes you skip. Free, weekly, unsubscribe anytime.
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