MCA field guide
Factor rate versus APR
Why a factor rate describes total payback while APR measures an annualized borrowing cost—and why the two should not be casually substituted.
Factor rate answers a different question
Multiply the funded amount by the factor rate to calculate contractual payback. A $100,000 advance at a 1.30 factor produces $130,000 in total payback before any separately disclosed fees. The factor does not include time by itself.
Payment speed changes effective cost
Two offers can share a 1.30 factor and have very different cash-flow effects when one remits over six months and the other over twelve. Renewal timing, reconciliation language, fees, and the actual repayment path can also change the economic result.
Compare complete offers
Record funded amount, net proceeds, total payback, frequency, estimated payment, expected term, fees, prepayment terms, and reconciliation rights. Use the comparison tool for arithmetic, then review the agreement and applicable disclosures for the legal terms.
Methodology and corrections
This guide distinguishes calculations, common industry practice, and lender-specific policy. Criteria should be confirmed from the dated source on each lender profile. Report an error through the correction policy.