Calculator
Merchant cash advance calculator
A 1.30 factor rate repaid daily over six months is about 110% APR. See what any offer really costs, and how much of the revenue it takes with the positions already pulling.
- Payback
- $65,000.00
- Daily payment
- $541.67
- Estimated APR
- 119%
- Cost of the advance
- $15,000.00
- Cost per $1 received
- $0.30
- Number of payments
- 120
- Term
- 5.5 months
- Payments a month
- $11,754.24
- Share of monthly revenue
- 19.6%
An estimate for comparing offers, not a disclosure.
Factor rate to APR, by term
Repay the same factor rate in half the time and the APR about doubles.
| Factor rate | 3 mo | 6 mo | 9 mo | 12 mo |
|---|---|---|---|---|
| 1.20 | 149% | 75% | 50% | 38% |
| 1.25 | 184% | 92% | 62% | 46% |
| 1.30 | 218% | 110% | 73% | 55% |
| 1.35 | 251% | 126% | 84% | 63% |
| 1.40 | 283% | 143% | 95% | 71% |
| 1.45 | 315% | 159% | 106% | 80% |
| 1.50 | 346% | 174% | 116% | 87% |
Estimated APR on daily payments with no fees. A month is 21.7 business days, so 6 months is 130 payments; weekly payments come out slightly lower. The FTC says the factor is often 20% to 50% of the advance, so the rows run from 1.20 to 1.50.
FTC, Strictly Business forum staff perspectiveHow the numbers work
- Payback
- Advance × factor rate
- $50,000.00 at 1.30 is $65,000.00.
- Payment
- Payback ÷ number of payments
- 120 daily payments of $541.67.
- Holdback
- Payment = monthly revenue × holdback ÷ payments in a month
- The number of payments is whatever it takes to reach the payback; the last one is smaller.
- Fees
- Net funding = advance − fees taken at funding
- Cost and APR are worked out on the money actually received.
- Share of monthly revenue
- A month's payments ÷ monthly revenue, with and without existing positions
- A month counts as 21.7 business days or 4.33 weeks.
- Estimated APR
- Actuarial rate per period × periods in a year
- Funded on a Wednesday, then a payment every weekday, or every 7 days. Bank holidays aren't skipped.
FAQ
Common questions
What is a factor rate?
The amount repaid for each dollar advanced. At 1.30, a $50,000.00 advance is repaid as $65,000.00, and the $15,000.00 difference is the cost. Unlike an interest rate, it doesn't change with how long repayment takes.
Is a 1.30 factor rate the same as 30% interest?
No. The 30% is charged once on the full advance, but the balance falls with every payment, and it's due over months, not a year. Repaid daily over 6 months, 1.30 is an estimated 110% APR; over 12 months, about 55%.
How do you turn a factor rate into an APR?
Put each payment on the calendar, find the rate per period at which the payments are worth the advance on the day it's funded, then multiply by the periods in a year. That's the actuarial method in Regulation Z, Appendix J, which California requires for the estimated APR on merchant cash advance disclosures.
Why is the APR so much higher than the factor rate?
The cost is charged on the whole advance, but payments start the next business day, so the merchant holds the full amount only briefly. $50,000.00 at 1.30, repaid daily over about 6 months, works out to an estimated APR of about 119%.
Do fees change the APR?
Yes. Fees taken out at funding mean the merchant receives less for the same payments, so the APR is worked out on the net funding, the way Regulation Z treats prepaid finance charges.
What is the holdback?
The share of the merchant's revenue that goes to the advance. Set the payment by holdback and the calculator turns it into a daily or weekly payment and a term; set it by number of payments and it shows the share that payment takes. Existing positions take their own share, so add them to see the total.
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