Factor Rate
The multiplier that sets the total repayment on an MCA. An advance of $100,000 at a 1.4 factor rate means the business repays $140,000 regardless of how fast it pays. Factor rates typically run 1.2 to 1.5, and unlike interest, the cost does not shrink if you repay early.
Why it matters
Converted to an annualized rate, a 1.4 factor repaid over six months is roughly 80 percent APR or more, which is the comparison funders' marketing avoids. New state disclosure laws increasingly force that APR equivalent to be shown before signing.
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