Factor rate calculator: turn a factor rate into the APR it really is
A factor rate is not an interest rate, and the shortcut almost every calculator online uses to convert one understates the answer by roughly half. This does the arithmetic properly — against the actual payment schedule — so you can put a factor-priced offer next to an interest-priced one and compare like with like.
What lands in your account.
Commonly quoted 1.10–1.50.
How long repayment runs.
How often it is drafted.
An interest-priced loan, for reference.
Annual percentage rate, solved against the real payment schedule.
The simple annualised cost rate — the figure produced by the formula most factor rate calculators publish.
The true figure is the periodic rate that makes the scheduled payments equal the amount financed, annualised the way an APR is — the same method behind a disclosed interest rate. It assumes equal payments and excludes origination or servicing fees, which push the real cost higher still. Fundur is a financing marketplace, not a lender; this tool prices an offer, it does not make one.
Why nearly every factor rate calculator gives you the wrong number
There are two ways to turn a factor rate into an annual percentage. One is arithmetic you can do in your head. The other is the one that would be required if the same money were quoted as interest. They do not agree, and the gap is not small.
Divide the total cost by the term
On $50,000 at a 1.30 factor over six months: $15,000 of cost against $50,000 is 30%, six months is half a year, so 30% doubled is 60%.
It is tidy, it is quotable, and it is the formula the highest-ranking factor rate calculators on the web publish on the page.
Solve the rate against the payment schedule
The same offer, repaid in six monthly instalments of $10,833. Solve for the periodic rate r that makes those payments worth $50,000 today, then annualise it.
This is the method behind an APR. It is not a stricter reading of the offer — it is the definition of the measure.
Where the missing half goes
The shortcut assumes you have the whole $50,000 for the whole six months. You do not. The first payment is drafted soon after funding, and by the halfway point roughly half the money has already gone back. Averaged across the term you are using materially less than the face amount, while paying a cost calculated on all of it.
Because the balance falls the whole way through, the true rate lands close to twice the shortcut figure. The multiple is fairly stable: across the offer shapes tested here it runs between 1.6× and 1.9×, and it widens as repayment is drafted more frequently.
Why a shorter term costs more, not less
This is the part that catches people out. With interest-priced borrowing, paying early saves interest. With factor-priced borrowing the cost is largely fixed the day you sign: $50,000 at 1.30 is $65,000 whether repayment runs six months or eighteen. Compressing the same $15,000 of cost into a shorter window does not save anything — it raises the rate you are effectively paying, because you have the money for less time.
So the shortest offer on the table is often the most expensive one, even though the total repayment on every offer is identical. Change the term in the calculator above with the factor rate held still, and watch the headline figure move while the total repayment does not.
Reading a factor-rate offer before you sign it
A factor-priced offer contains several numbers that together determine what it costs. Quotes tend to lead with the one that looks smallest.
| What you are shown | What it actually controls | What to ask for |
|---|---|---|
| The factor rate for example 1.30 | The total cost, and nothing else. A 1.30 factor is $30 of cost per $100 financed regardless of how long repayment takes. | The total dollars repayable, in writing. A factor rate on its own is not a price you can compare. |
| The amount financed | What reaches your account — which may be less than the amount approved, if fees are deducted at funding. | The net figure that will land, not the gross approval. |
| The term | The rate. The same cost over less time is a higher rate. This is the single biggest lever on the true figure. | Whether the term is fixed, or an estimate that moves with your receipts. |
| The payment frequency | Both your cash flow and the rate. Daily drafting pulls money back faster than a monthly schedule, which raises the effective cost of an otherwise identical offer. | The exact draft amount and the exact draft days. |
| Fees origination, servicing, ACH | Cost the factor rate does not include. A fee deducted at funding raises the rate twice over — it adds cost and reduces what you actually received. | An itemised list, and whether each is deducted up front or billed separately. |
Two questions settle most of it: what is the total number of dollars I will repay, and what is the APR. Any offer worth taking can answer both in writing. If a quote can only be described as a factor rate, that is itself information.
One naming note. Some lenders market a working capital loan as a merchant cash advance. Structures, rates and terms vary by lender across Fundur's network. The pricing arithmetic on this page applies either way — if an offer is quoted as a multiple rather than a rate, this is how you price it. See working capital loans for how the product itself works, and business loan rates for how interest-priced borrowing is quoted.
What the same money costs when it is priced as interest
Factor pricing exists because it buys speed and a lighter file. That trade is sometimes worth making. It is only a decision, though, if you can see both sides of it in the same units.
The comparison field in the calculator does this directly: it takes the amount you entered, applies a conventional amortising loan at the APR you set, and shows the interest that loan would cost over the same term. On the default figures — $50,000 over six months — a 16% APR term loan costs roughly $2,360 in interest against $15,000 on the 1.30 factor. The factor-priced money is not marginally dearer. It is several times dearer, and the calculator prints the multiple.
That gap is the price of access and speed, and there are situations where paying it is the right call: an order that has to be funded this week, a file too light for a bank, a gap that closes in weeks rather than years. There are also situations where it is simply the first offer someone accepted without pricing the alternatives.
The routes worth pricing a factor-rate offer against, in rough order of cost:
An SBA loan
The cheapest money available to most small businesses, and the slowest. Weeks rather than days, with the rate capped by regulation. SBA loans
A term loan
Interest-priced, amortising, on a fixed schedule. The natural comparison for a factor-rate offer of the same size. Business term loans
A line of credit
Interest generally accrues only on the drawn balance, so a gap you dip into briefly costs less than a lump sum you hold. Other fees vary by lender and agreement. Business lines of credit
If unpaid invoices rather than cash flow are the constraint, invoice factoring prices against the invoice instead of the business, which is a different calculation again.
If you already have factor-priced financing
Running an existing agreement through the calculator is often more useful than pricing a new one, because it turns a daily debit you have stopped noticing back into a number.
Enter what was originally financed, the factor rate on the agreement, and the term as it has actually run. Two things commonly come out of it. The first is that the rate is higher than the impression the original quote left. The second is that a second or third position taken on top of the first, each with its own draft, compounds into a repayment load the business was never underwritten for.
Where the arithmetic says the existing cost is out of line with what the business could qualify for today, the fix is usually a single replacement position rather than another one stacked on top. Fundur can look at consolidating or paying off existing business positions, subject to what the network will place and what the current agreements allow. Prepayment terms matter here: because the cost is largely set at signing, paying a factor-priced agreement off early does not necessarily release the unearned portion unless the agreement says so.
Bring the actual agreements rather than the memory of them. The payoff figure, the draft amount and the frequency are what determine whether a replacement is worth doing. If the file is light, what is actually required is a shorter list than most people expect.
Factor rates, answered
What is a factor rate?
A factor rate is a multiplier applied to the amount financed to give the total you repay. A 1.30 factor on $50,000 means $65,000 repayable. Unlike an interest rate it does not accrue over time, so on its own it says nothing about how expensive the money is. The term is what turns a factor rate into a rate.
How do I convert a factor rate to an APR?
Properly, you solve for the periodic rate that makes the scheduled payments equal the amount financed, then annualise it, which is what the calculator on this page does. The shortcut you will see elsewhere divides total cost by the term. It is easy to do by hand, but it understates the answer by roughly 1.6 to 1.8 times because it ignores the fact that the balance is falling throughout.
Is a 1.3 factor rate the same as 30% interest?
No, and the difference is large. A 1.30 factor is 30% of the amount financed in total cost, but the rate that represents depends entirely on the term. Repaid over six months it works out near 97% on a monthly schedule and higher on a daily one. Repaid over eighteen months the same 1.30 factor is around 35%. The factor did not change; the time did.
Does paying off a factor-rate agreement early save money?
Usually much less than people expect, and sometimes nothing at all. Because the cost is largely fixed at signing rather than accrued over time, repaying early generally means paying the same total over a shorter period, which raises the effective rate rather than lowering the cost. Some agreements do offer an early-payoff discount. Whether yours does is a question for the agreement, not a general rule.
Why does daily repayment cost more than monthly at the same factor rate?
Because the money returns to the lender sooner. The total repayment is identical, but with daily drafting your average outstanding balance across the term is lower, so the same dollar cost represents a higher annualised rate. On $50,000 at a 1.30 factor over six months, the difference between a monthly and a daily schedule is roughly 97% against 109%.
Are the figures on this page exact?
The arithmetic is exact for the inputs given and assumes equal scheduled payments. Real offers vary: fees deducted at funding raise the true cost, a term that flexes with your receipts makes the annualised figure an estimate rather than a fixed quantity, and weekends and holidays shift a daily schedule. Treat the output as the right way to compare offers rather than as a quotation. Figures for any actual offer come from the lender.
Does Fundur charge a factor rate?
Fundur is a financing marketplace, not a lender, so it does not set pricing. Some financing placed through the network is priced with a factor rate and some with an interest rate, and which you are offered depends on the lender and on your business. What you should expect either way is the total dollars repayable and an APR, side by side, before you decide.
What counts as a normal factor rate?
Quotes commonly fall between about 1.10 and 1.50, but the range is wide and the number on its own is not a useful benchmark. A 1.15 factor repaid over three months is more expensive than a 1.35 factor repaid over two years. Compare offers on the total repayable and the APR, never on the factor rate alone.
You have the number. The useful next step is seeing what else that money could be priced at.
One application, compared across lenders, with the total repayment and the APR shown together on every offer — already in the units this page has just put the offer into.
Fundur is a financing marketplace, not a lender. Checking your options uses a soft credit pull and does not affect your credit score.