MCA tool
MCA Factor Rate to APR Calculator
Same factor rate, faster debits, higher yearly cost. Enter the figures from your own offer or contract and see what a merchant cash advance costs per year at the pace it is repaid, fees included. The arithmetic is on the page and nothing you type is sent anywhere.
What it does
Turns a factor rate into an estimated APR at the repayment pace you enter
What you need
Amount advanced, factor rate, any fees deducted, and the term or your debit
What it shows
How the same factor rate costs more per year the faster it is collected
What APR is a 1.4 factor rate?
It depends entirely on how fast it is repaid. On an illustrative $50,000 advance at 1.4, repaid in business-day debits, it is about 141 percent APR over six months and about 71 percent over twelve. The dollars repaid are the same $70,000 either way.
- Nothing you type is sent anywhere
- Actuarial method, Regulation Z Appendix J
- Every example figure is illustrative
Calculator
Factor rate to APR
Type the figures from your own offer or contract. Nothing you enter is sent anywhere.
Actual finance charges only, such as origination or underwriting; 0 if none. Exclude prior-debt principal paid to another funder.
Your estimate, or the one in your disclosure.
Estimated APR at this pace
141.1%
Repaid over about 6 months in 130 business-day debits of $538.
Amount financed includes proceeds paid to you or on your behalf, including a direct payoff of old principal, less actual withheld fees.
- Amount financed
- $50,000
- Cost of the money
- $20,000
- Simple yearly cost
- 80%
Estimated APR at this pace 141.1%. Total repaid $70,000, cost of the money $20,000.
Five repayment speeds
The same factor rate, collected at different speeds
- Estimated APR
- Your period
- Your pace 141.1%
3 months
277.6% estimated APR
- Daily debit
- $1,077
- Cost of the money
- $20,000
6 monthsYour pace
141.1% estimated APR
- Daily debit
- $538
- Cost of the money
- $20,000
9 months
94.6% estimated APR
- Daily debit
- $359
- Cost of the money
- $20,000
12 months
71.1% estimated APR
- Daily debit
- $269
- Cost of the money
- $20,000
18 months
47.6% estimated APR
- Daily debit
- $179
- Cost of the money
- $20,000
The dollars you repay do not change down this column. Only the time does, and with it the yearly cost.
Arithmetic on the figures you entered, not an offer, not advice and not the APR of any contract. An advance has no fixed term, so the yearly figure depends on the pace you enter.
Have us read your contractWhy does the same factor rate give different APRs?
A factor rate is a multiplier that fixes the total you repay on the day you sign. It carries no time at all. An APR is a cost per year. To get from one to the other you have to supply the time, and the moment you do, the answer moves: the table under the calculator holds the dollars still and changes only the repayment period, and the yearly cost falls as the period lengthens. The full walk-through is in MCA holdback and factor rates.
Daily debits push the figure up again. Each business day hands part of the money back, so on average you hold much less than the amount advanced. The calculator uses the actuarial method of the federal Truth in Lending rules (Regulation Z, Appendix J), the method New York and California use for the estimated APR that providers of sales-based financing must disclose: it finds the yearly rate at which your actual debits, on their actual dates, repay what you actually received. Which states require that disclosure is in the MCA disclosure laws by state table.
How the math works
Illustrative: $50,000 at 1.4, 6 months, business-day debits
1Advance × factor rate
$50,000 × 1.4
= $70,000 total repaid
Cost of the money $20,000
2Split into the debits you pay
130 × $538
business-day debits
One mark per debit, a column per week of five.
3Find the yearly rate
about 141% APR
at which those debits repay the amount financed, including proceeds paid on your behalf
Daily debits hand the money back from the first business day.
Which figures do you need from your contract?
The amount advanced, sometimes called the purchase price: what the funder agreed to pay for your future receivables.
The factor rate, or the purchased amount (the total you repay). Divide the purchased amount by the amount advanced and you have the factor rate.
Actual fees or prepaid finance charges deducted at funding. Use the itemized funding statement, not simply the difference between the contractual advance and your bank deposit. Money paid directly to an existing funder on your behalf is financed proceeds, not a new fee. For example, if a $50,000 advance pays $30,000 to an old funder, withholds $2,000 in actual fees and deposits $18,000 in your account, enter $50,000 as the advance and $2,000 as fees, not $32,000. Even if all proceeds go to a payoff, enter only actual fees in this box.
The debit, and how often it is taken. Your bank statement shows it even if the contract only gives a holdback percentage. If your contract or disclosure states an estimated term, use that.
What can this number not tell you?
It is not the APR of your contract, because a merchant cash advance does not have a fixed term. If your sales fall and the funder reconciles your debits to them, repayment slows and the yearly cost drops. Whether your contract gives you that right, and whether it is honoured, are separate questions; the questions to ask before you sign cover them. It also ignores anything the contract adds later, such as default fees, and any early payoff discount a funder agrees to in writing.
With several advances running at once, run each one separately. The combined daily pull on your account is what the stacked position calculator is for.
What should you do with the result?
Put it next to the alternatives. A bank or SBA term loan quotes an APR directly, so the comparison is now like for like: see merchant cash advance vs business loan. If the advance is already squeezing cash flow, the routes out, including the ones we do not offer, are laid out in how to get out of a merchant cash advance, and when consolidation is the wrong answer says plainly when a lawyer, not a funding company, should be your first call.
Frequently asked questions
You need three things: the amount advanced, the factor rate and how long repayment takes. Multiply the advance by the factor rate for the total repaid, split it into the daily or weekly debits you actually pay, then find the yearly rate at which those debits pay back what you received. On an illustrative $50,000 advance at 1.4, repaid in business-day debits over six months, that estimated APR is about 141 percent. Over twelve months it is about 71 percent.
Because the factor rate fixes the dollars and says nothing about time. The total you repay is set the day you sign. Collect it faster and the same dollars are paid for the use of the money over fewer days, so the cost per year rises. That is why a shorter repayment period is not a discount on a merchant cash advance.
No. It is the estimated APR if your advance repays at the pace you entered. A merchant cash advance has no fixed term: if your sales fall and the funder reconciles your debits, repayment slows and the yearly figure falls; if debits stay fixed, it does not. Treat the result as a way to compare offers and to ask better questions, not as a figure from your contract.
Yes, include actual fees or prepaid finance charges withheld at funding, not money paid directly to an existing funder on your behalf. A direct payoff is financing provided to you even when it never reaches your bank account. Ask for an itemized funding statement rather than treating the difference between the advance and your bank deposit as fees. In the illustrative six-month example, an actual $2,500 fee deduction moves the estimated APR from about 141 to about 164 percent.
The simple yearly cost divides the cost of the money by what you received and by the number of years, as if you held the full amount the whole time. You do not: daily debits hand the money back from the first business day. The APR accounts for that, which is why it is higher. On the illustrative example the simple figure is 80 percent against an APR of about 141.
MCA debt relief
Want a second pair of eyes on the contract?
Send us the figures and we will tell you what the advance costs, what your options are, and when the honest answer is that we are the wrong firm.
- A person reads this, not a bot, and replies within one business day.
- This form authorizes neither a lender application nor a credit pull. Lender review needs separate permission. Preliminary illustrations are not final pricing; review final terms before signing.
- We provide business financing, not legal representation or debt-settlement services. If your situation needs a lawyer, we will tell you that instead.
- If consolidating is the wrong move for your numbers, we say so and tell you who to call instead.