Run your numbers
Factor rate vs. interest rate
A factor rate is charged once on the full amount, so the cost does not fall as you repay the way interest on a declining balance does.
A 1.25 factor on $75,000 means $93,750 repaid, or $18,750 of cost, no matter how quickly the balance falls (unless the contract offers an early-payoff discount). See the total cost of a funding offer.
Will the use pay back the cost?
Compare the cost of funding with the profit the money will produce within the term.
ROI Funder starts from that payback math. Read how much funding your business can afford and marketing payback math.
Frequently asked questions
What is a typical factor rate?
Offers vary with the file and the funder. Compare the total payback and the monthly equivalent rather than the factor alone.
Can I convert a factor rate to an APR exactly?
Only approximately, because the APR depends on the payment schedule and how fast the balance falls.