Free calculator
Factor rate to APR calculator
A factor rate and an APR are not the same number and cannot be compared directly. A 1.35 factor rate on $50,000 over 6 months costs $17,500 in fees — an estimated APR of roughly 140%, not 35%. Enter your numbers below to see the real annualised cost.
- Total payback
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- Cost of capital
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- Cost per $1 borrowed
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- Daily payment (21 days/mo)
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Illustration only. Assumes a fixed payback over the term shown and roughly 21 business days per month. Actual rates, terms and payment schedules are set by the funding partner and depend on your business. This is not an offer of credit.
How to read the result
A factor rate is a multiplier, not an interest rate. At 1.35 you pay back $1.35 for every $1.00 you receive, and that total does not shrink if you pay early on most advance structures.
APR annualises the same cost. That matters because a 1.35 factor over 6 months and a 1.35 factor over 18 months cost the same in dollars but are wildly different in annualised terms — the shorter one is far more expensive per unit of time.
Why the APR looks so high
Two things drive it. First, the fee is fixed up front rather than accruing on a declining balance. Second, you start paying it back immediately, so your average outstanding balance over the term is roughly half the amount advanced — you're paying the full fee for the use of about half the money.
That is not a trick and it is not necessarily bad. Short-term capital is priced short-term. But you should know the number before you sign, and you should use it when you compare one offer against another.
The comparison that actually helps
| Structure | $50,000, 6 months | What you pay back |
|---|---|---|
| Advance at 1.20 factor | $10,000 fee | $60,000 |
| Advance at 1.35 factor | $17,500 fee | $67,500 |
| Advance at 1.49 factor | $24,500 fee | $74,500 |
Same money, same term, $14,500 spread. This is why it is worth having more than one offer in front of you.
Straight answers
Is a factor rate the same as an interest rate?
No. A factor rate is a multiplier applied once to the full amount advanced. A 1.35 factor on $50,000 means $67,500 back regardless of how fast you repay. Interest accrues on a declining balance; a factor rate does not.
Why is the APR on an advance so much higher than the factor rate?
Because the fee is fixed up front and repayment starts immediately. Your average outstanding balance across the term is roughly half the amount advanced, so you are paying the whole fee for the use of about half the money — and APR annualises that.
Does paying off an advance early save me money?
On most advance structures, no. The payback amount is fixed at signing. Some funders offer an early payoff discount but it is not standard, and it has to be in the contract to be real. Ask before you sign, not after.
Is this calculator exact?
It is an estimate. It assumes a fixed payback over the term you enter and about 21 business days per month. Real schedules, holdback percentages and reconciliation clauses vary by funder, so treat the result as a comparison tool rather than a quote.