What does this calculator compute?
It converts a factor rate into the three numbers that actually decide whether an advance works: the total you repay, the cost in dollars, and the share of your sales the debit takes. The APR figure is an annualized internal rate of return on those cash flows — an estimate built for comparison, not a quote, and not the same as an interest rate on a loan.
How is MCA payback calculated?
Total payback is the advance multiplied by the factor rate. A $50,000 advance at 1.30 repays $65,000, so the cost is $15,000. The funder then divides that total into equal debits: $65,000 over 126 business days (six months at 21 days a month) is about $516 a business day. The factor rate does not fall if you repay faster unless the contract has an early-payoff discount.
What does the APR estimate mean?
Because the same $15,000 cost is spread over a shorter or longer time, the effective annual cost changes sharply. Over 12 months the example above is roughly 73% APR; over six months it is roughly 198%. APR above 100% is normal for short-term advances — the cost is small in dollars but large relative to the short time the money is outstanding.
The figure here is the annualized internal rate of return on the debit stream, compounded over 252 business days. Some providers disclose an “estimated APR” computed with a state-prescribed formula, which can produce a lower number for the same contract. Compare total payback in dollars first, then compare APRs only when both were calculated the same way.
MCA vs a term loan over the same term
| $50,000 at 1.30 over 12 months | $50,000 term loan at 12% APR, 12 months | |
|---|---|---|
| Total repaid | $65,000 | ≈ $53,300 |
| Cost | $15,000 | ≈ $3,300 |
| Payment | ≈ $516 per business day | ≈ $4,440 per month |
| Pricing basis | Factor rate on the amount | Interest on the declining balance |
The loan is cheaper in dollars but slower and harder to qualify for. If a loan covers the need, it usually wins on cost. The MCA case is a short, specific gap with a clear payback — not a way to fund ongoing losses.
What the calculator leaves out
Origination or underwriting fees, ACH fees, late or returned-payment fees, and any required insurance are not included. Some contracts use calendar days instead of business days, which raises the effective APR. A true reconciliation clause — where payments fall when sales fall — can reduce the real burden but does not change the total owed under a fixed factor rate.
What to check before you sign
- Total payback in dollars, not just the factor rate.
- The estimated APR the provider is required to disclose in your state.
- Whether reconciliation is real, and how you request it.
- The personal guarantee, UCC lien, and what happens on a returned debit.
Background: what an MCA is, how restructuring works, and what a default costs.