A factor rate is a multiplier; APR is an annualized measure of borrowing cost. Treating a factor rate of 1.30 as a 30% annual rate can lead to a misleading comparison.
Factor-rate example
For an illustrative $50,000 advance at a 1.30 factor, the specified repayment is $65,000 and the base financing cost is $15,000, before other fees. This calculation alone says nothing about how quickly the balance is collected.
Why timing changes the comparison
Repaying $65,000 over six months differs from repaying it over twelve months. Frequent payments reduce the outstanding balance earlier. A valid annualized comparison needs actual dates, amounts, net proceeds and applicable fees—not just a multiplier.
Interest rate is not always APR either
Interest rates may exclude certain fees. APR methods can include fees and timing, and disclosure rules differ by product and jurisdiction. Ask the provider which method its disclosure uses. A calculator estimate is not a regulatory APR disclosure.
What to request from a provider
Compare the net cash received, total repayment, fees, collection frequency, collateral or guarantees, and early-payoff provisions in writing. Approval, pricing and timing depend on the provider and your business; no guide or estimate is a funding offer.
Questions business owners ask
Can I subtract one from a factor rate to get APR?
No. Subtracting one gives the base financing cost as a share of the advance, not an annualized rate.
Does this calculator quote APR?
No. It shows factor-based repayment and illustrative collection amounts. APR requires actual cash flows and an applicable disclosure methodology.