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Factor rate

What a factor rate really costs you

Advances are quoted as a factor, not a rate, and the two are not comparable. Enter the offer and see total dollars repaid, the daily or weekly remittance, and the annualized cost so you can compare it against a loan.

$100,000
The cash that hits your account, before any origination fee.
1.35
Quoted as a multiple, e.g. 1.35.
9 months
3%
Deducted from your funding, not added to payback.
Estimates only, not an offer or an APR disclosure. Nothing you enter leaves your browser and no credit is checked.
Total you repay
$135,000

Cost of capital: $35,000 on $100,000 funded

Cash actually received
$97,000
Daily remittance
$692.31
Weekly remittance
$3,464
Annualized cost
52.2%
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How to read it

Reading a factor rate honestly

A factor rate multiplies the amount funded. A 1.35 factor on $100,000 means $135,000 repaid — the $35,000 does not shrink if you pay early unless the contract includes a prepayment discount in writing.

That is why an advance repaid in six months is roughly twice as expensive, annualized, as the same factor repaid over twelve. The shorter the term, the higher the true cost, which is the opposite of how people instinctively read it.

Use the annualized figure only for comparison against loan pricing. It is not an APR disclosure, and advances are not loans — but it is the only way to see whether the fast money is worth the premium.

Tool questions

What people ask about this.

No. Interest accrues on a declining balance; a factor is a fixed multiple of the amount funded. That is why paying an advance off early can raise the effective cost rather than lower it.
Some funders offer them, and some do not. It has to be written into the agreement — a verbal promise from a sales rep is worth nothing. Ask for the clause before signing.
Broadly 1.15 to 1.49 depending on credit, time in business, industry and existing positions. If you are being quoted above that, your file should be shopped further before you accept it.
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