FundingExplained.com — Independent US small business funding resource. Not a lender. Not financial advice.
Why This MattersMCA brokers quote a factor rate — 1.3, 1.4, 1.5 — because it sounds small. A 1.4 factor doesn’t sound like much until you convert it. A 1.4 factor on $50,000, repaid over 6 months through daily drafts, has an APR equivalent that clears 100%. On 4 months, it clears 150%. This calculator converts any offer to a true annual rate so you can compare it against every other option on the same scale.
The Calculator
Enter any MCA offer. See what it actually costs per year.
The amount deposited into your account
Usually between 1.1 and 1.5. Found on your contract as “factor rate” or “buy rate”
Total months until fully paid back (ask your broker if unsure)
Please fill in all three fields with valid numbers.
APR Equivalent
—
Compared to other funding options
Your MCA offer
—
Bank-backed line
18–35% APR
Invoice factoring
~12–30% APR equiv.
0% card stack (intro)
0% for 12–24 months
What to Do With This Number
If your APR equivalent is above 40%, you’re in expensive money. The question is what you’re using it for and whether there’s a cheaper alternative available to you now — or with 30–90 days of preparation.
If it’s above 100%, the capital cost is almost certainly compressing your margin significantly. Most businesses operating at 100%+ APR equivalent cost of capital are not growing — they’re servicing debt.
If it’s above 200%, the math on continued MCA use is almost never sustainable. The MCA Exit Sequence shows the month-by-month path out.
How Every Option Compares
| Funding Type | True APR / Cost | Credit Needed | Speed |
|---|---|---|---|
| 0% Card Stack | 0% (intro 12–24 mo) | 580+ | 7–21 days |
| Invoice Factoring | ~12–30% APR equiv. | None | 24–48 hrs |
| Bank-Backed Line | 18–35% APR | 551+ | 2–6 weeks |
| SBA 7(a) | ~10% APR | 680+ | 30–90 days |
| CDFI Microloan | 8–36% APR | 550+ flex | 2–4 weeks |
| MCA 1.25 factor | 40–80% APR equiv. | Very low | Same day |
| MCA 1.35 factor | 65–130% APR equiv. | Very low | Same day |
| MCA 1.45 factor | 90–180%+ APR equiv. | Very low | Same day |
Common Questions
Why don’t MCA lenders quote APR?
MCAs are technically not loans — they’re a purchase of future receivables. This classification has historically exempted them from the Truth in Lending Act (TILA) requirements that force consumer and business lenders to disclose APR. Without a legal requirement to show APR, most MCA lenders don’t — because if they did, the comparison to bank lines (18–35% APR) would be immediate and obvious. New York’s Commercial Finance Disclosure Law (CFDL) now requires APR disclosure for commercial financing in New York. California’s SB 1235 has a similar requirement. Most other US states do not yet have equivalent requirements.
Is this calculator 100% accurate?
It uses simple interest APR calculation: (total fees ÷ advance amount) ÷ (repayment months ÷ 12). This is the standard method for converting fixed-fee advances to annual rate equivalents and is the same formula used by regulators and academic research on MCA true costs. The actual APR using an actuarial method (which accounts for the declining balance as daily payments reduce principal) would be slightly higher than what this calculator shows — meaning the calculator is conservative. The number you see is the floor, not the ceiling.
What if I don’t know my repayment period?
Ask your broker or funder directly: “How many months until this is fully paid back at the agreed daily payment?” They are required to tell you. If the daily payment is variable (based on a percentage of daily card sales), ask for the estimated repayment term based on your current revenue. If they refuse to give you an estimated term, that itself is a signal — and the calculator’s result at 6 months versus 4 months will show you the range.
My APR is over 100%. What now?
At 551+ personal credit and $10K+/month revenue, bank-backed working capital at 18–35% APR is available in 5–7 days. On $50,000: bank-backed costs $6,250 versus $17,500+ for a 1.35 factor MCA. The MCA Exit Sequence covers the full path including what to do if your credit is below 551. The Eligibility Quiz shows what you qualify for right now in 15 minutes with no hard pull.