Invoice factoring and every other option, priced side by side for you to judge
Factor rates in dollars. APR-equivalents next to every quote. The terms agreements actually use, defined. Do the reading first, and only apply if the numbers work for your business.
- Costs shown as dollars and APR-equivalent
- Banks and alternatives on the same table
- Written for owners, reviewed against current agreements
Start here
- 01What does a merchant cash advance really cost?Six months at a 1.30 factor does not equal 30% a year. See the arithmetic.
- 02Bank loan, line of credit, SBA or advance?One table compares eight options by cost, speed, term and requirements.
- 03How much could my business qualify for?It gives you a range based on your monthly revenue, history, open positions and credit.
- 04The words in the agreementHoldback, reconciliation, confession of judgment, UCC lien — defined.
$50,000 at 1.30, 6 months
Turn a quote into dollars
- 01Factor rate cost calculatorTake an advance quote, with its amount, factor rate, term and remittance schedule, and see the total payback, the dollar cost, the daily or weekly remittance and the APR a loan would have to carry to cost as much.
- 02How much can I qualify for?A first-look estimate of your funding range, worked out the way an underwriter would from average monthly revenue, time in business, open positions and credit band.
- 038 options, one tableBanks, SBA and advances compared on typical cost, speed, term, requirements and when each one fits.
Explainers, answer first
What business funding costs, by option
Full comparison →| Option | Typical cost | Speed | When it fits |
|---|---|---|---|
| Merchant cash advance | Factor 1.15–1.45 → roughly 40–150% APR-equivalent | 1–3 days | A quick, high-margin need that can't sit through a bank's timeline; owners who have already been turned down by a bank |
| Revenue-based financing | Cap of 1.2–1.6× the amount | 3–7 days | Businesses that are seasonal or growing fast and need payments that rise and fall with sales |
| Credit lines for businesses (bank) | Prime + 1–5%, roughly 9–14% APR | 1–4 weeks | For gaps that keep coming back; the cheapest flexible money a business that qualifies can keep on hand |
| Online line of credit | Roughly 20–60% APR | 1–3 days | A line of credit for when a bank's minimums or schedule won't work |
| Bank term loan | Roughly 8–14% APR | 2–8 weeks | Planned spending when you can wait to qualify; the lowest cost outside of SBA |
| SBA 7(a) loans | Prime + 2.25–4.75%, roughly 10–14% APR | 30–90 days | The biggest, longest-term and cheapest capital within a small business's reach, if the timeline allows |
| Equipment financing | Roughly 7–20% APR | 2–10 days | Equipment purchases: since the asset itself backs the deal, pricing comes in far under unsecured capital |
| Invoice factoring | 1–5% of the invoice per month outstanding | 1–3 days after setup | Businesses with reliable customers who take 30–90 days to pay |
The costs shown are not offers but typical ranges for small businesses in the U.S. as of the date this page was updated. For advances, APR-equivalents assume daily remittances across the stated term; the factor rate calculator shows the math.
The words in the agreement
Glossary A–Z →APR-equivalent, Average daily balance, Broker, Credit lines for businesses, Confession of judgment, Default, Discount for paying early, Equipment financing, Factor rate, Holdback, Invoice factoring, Merchant cash advance, Negative days, Personal guaranty, Position, Purchased amount.
Plain answers, then the detail
Is a merchant cash advance a loan?
No. An MCA is a purchase of a fixed amount of your future receivables at a discount: you receive a lump sum now and remit a set daily or weekly amount, or a percentage of card sales, until the purchased amount is delivered. There is no interest rate because this is not a loan; what you pay is the gap between the amount you remit and the amount you receive, stated as a factor rate, and you can only set that factor rate against a loan after converting it to an APR-equivalent over the same term.
What's the right way to compare a factor rate and an interest rate?
Put both into dollars across the same number of months, and then work out the APR. A $50,000 advance priced at 1.30 for six months carries a $15,000 cost, roughly 109% APR-equivalent with daily remittance. Borrowing the same $50,000 for six months on a bank term loan at 12% APR would cost roughly $1,770. An advance can still be the right choice when a bank won't fund a short, high-margin need in time, as long as you look at both numbers before you pick.
When is a bank the better choice?
Whenever it can say yes in the time you have. An advance costs many times what a bank term loan or line of credit does, and an SBA 7(a) loans costs even less than those. Owners with two years in business, a score of 680 or higher and clean financials should start there. The extra cost of alternatives is worth it when an opportunity or a gap can't wait, or when a bank has already turned you down.
What do funding partners look at?
The first thing reviewed is deposits, meaning three to six months of business bank statements, the average daily balance, negative days and any positions already open. The range comes from time in business and the owner's credit band, while the statements decide the exact number. Most advance and revenue-based programs let you see options without handing over tax returns.
Does reading or applying affect my credit?
Reading does nothing. Starting a request does not pull credit. If you decide to pursue a specific offer, the funding partner might check your credit with a soft or hard inquiry, and you'll know which one before it's run.
How is this site paid?
When a request we refer is funded, The Barlow Finance Institute receives compensation from a funding partner. It costs readers nothing to read, apply or get options. Every page that leads to the application states this plainly, and we also publish the cases where a bank, a line of credit or waiting a quarter is the right choice.
Want to see how your own numbers come out?
Send one request with three months of statements and get options from our network of funding partners in plain dollars, or a straight answer that a bank would serve you better.