Factor Rate

What it means

Factor rates are usually quoted between roughly 1.1 and 1.5. The critical difference from an interest rate is that the cost is fixed at the start and does not decrease if you repay early, which is why a factor-rate product and an interest-bearing loan cannot be compared on the headline number alone.

Why it matters when you apply

Underwriting for revenue-based business funding leans on bank activity, time in business, industry and existing positions. Where this term touches one of those, it can move a decision.

See the four factors that decide most files on the qualification page.

Related terms

Total Payback — The full amount a business will repay over the life of a facility, including all costs.

Merchant Cash Advance — The purchase of a portion of a business's future revenue at a discount, repaid through a percentage of daily or weekly deposits.

Holdback — The fixed percentage of daily or weekly card and bank deposits that a funder withholds to repay an advance, commonly 10% to 20%.

Where this fits

Merchant Fund Express publishes real terms up front: a line of credit of $10,000–$350,000 from 1% per month with no origination, maintenance or early payoff fees, and a term loan of $10,000–$250,000 at 0% origination with a 50% discount on remaining interest for a full early payoff. See the products →

Common questions

What is factor rate?

A multiplier — not an interest rate — used to price a merchant cash advance. A $50,000 advance at a 1.4 factor rate means you repay $70,000 in total.

How does this affect my approval?

It depends on the factor it touches — industry, bank activity, time in business or existing positions. Those four decide most files.

Where can I see real rates and terms?

Every product page on this site publishes the amount range, term, rate and fee structure up front.