Interest accrues. A factor rate does not.
This is the single most expensive misunderstanding in business funding. The full comparison →
Why the same rate costs two different amounts
Take $50,000 at 1% a month. Drawn and repaid evenly over twelve months, the interest lands near $3,300, because the balance you are paying on falls every month.
Hold that same $50,000 for the full twelve months without repaying, and the interest is closer to $6,000. Same rate, nearly double the cost, decided entirely by how you use the facility.
That is why a line of credit suits uneven needs and a term loan suits a defined one. Drawing money you do not need yet is the most common way businesses pay more than they had to.
What moves your rate
Rate is set by the strength of the file, and the inputs are the same ones used for eligibility.
How it works
1. Apply in minutes
A short application. No impact to your credit score to see what you qualify for.
2. Same-day decision
We review revenue, time in business and bank activity — not just a credit score.
3. Review your terms
You see the amount, the term and the total cost before you sign anything.
4. Funded next business day
Money in your account, typically the next business day after signing.
Common questions
What interest rate do business loans charge?
Ours start at 1% per month on a line of credit. Rates across the market vary enormously by product; OnDeck publishes an average of 53.2% APR on its term loans.
Is interest charged on the full amount?
On a line of credit, no — only on what you have drawn and not yet repaid. On a factor-rate advance the cost is set on the full amount at funding.
Does paying early reduce interest?
On an interest-bearing product, always. Our term loan goes further with a 50% discount on remaining interest for a full early payoff.
Why is business loan interest higher than a mortgage?
A mortgage is secured against property. Unsecured business funding is priced on revenue and bank activity with no asset behind it.