Questions owners actually ask

What is a factor rate, and why does the term matter as much as the rate?

A factor rate is a multiplier, not an interest rate. 1.30 on $50,000 means you repay $65,000, full stop, no matter how fast you repay it. The term you are offered changes how hard that fixed cost hits, month to month.

A factor rate is a flat multiplier applied to the amount you receive. Borrow $50,000 at a factor rate of 1.30 and you repay $65,000 in total. The $15,000 is fixed on day one: it does not shrink if you pay early, the way interest does.

Why it is not an interest rate

Interest accrues over time, so paying off early saves money. A factor rate does not accrue. It is set at the start and owed in full regardless of how quickly you repay, unless the funder offers an early payoff discount. Always ask whether one exists. An advance is not a loan and does not carry an interest rate or an APR; the factor rate is the whole price, stated once.

Why the term matters as much as the rate

The number the industry rarely shows is not a rate at all. It is what the same fixed cost turns into once you divide it by the length of the deal:

Advance	Factor	Total repaid	Term	Roughly per month
$50,000	1.30	$65,000	6 months	about $10,830
$50,000	1.30	$65,000	12 months	about $5,420
$50,000	1.30	$65,000	18 months	about $3,610

Same rate, same money, three very different monthly loads on the business. Term is the variable nobody points at. A short term makes a modest-looking factor rate hit far harder against your cash flow, every single month, than the same rate spread over a longer term.

Is 1.30 a bad rate?

It depends entirely on what it is buying. A 1.30 that funds a piece of equipment which earns more than $15,000 over the same period is a good trade. A 1.30 used to cover a shortfall that will still be there in six months is how businesses end up stacking advances.

Run the numbers on our funding calculators before you sign anything.

Questions to ask before accepting one

What is the total payback, in dollars?
What is the payment, and is it daily, weekly or monthly?
Is there a discount for paying it off early?
What happens if a payment fails?
Is there a personal guarantee or a confession of judgment?

Questions owners ask

Is a factor rate the same as interest?

No. Interest accrues over time and shrinks as you repay. A factor rate is fixed at the start and owed in full regardless of speed, unless the contract includes an early payoff discount.

What is a typical factor rate?

They commonly run from about 1.1 to 1.5 depending on risk, time in business and revenue consistency. The term matters as much as the rate.

Can I negotiate a factor rate?

Sometimes, particularly with strong deposits and no existing positions. The term and the early payoff discount are often easier to move than the rate itself.