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Cost Guide · 2026

Business Funding Factor Rates Explained

Understand what funding really costs — factor rates, interest, and how to compare them apples-to-apples.

$25K–$5Mfunding range
24 hrstypical funding
500+credit scores OK
All industriesdirect funder
No collateralfor working capital

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  • ✓ 6+ months open
  • ✓ $10K+/mo revenue
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Short answer: A factor rate (e.g. 1.3) is multiplied by the funded amount to set total payback — so $50,000 at 1.3 repays $65,000. Unlike interest, it doesn't decrease as you pay down, which is why the effective cost can be higher than a rate suggests. Revenue-based funding and lines of credit often lower that effective cost — all available through Direct Fast Funding.

Factor rate vs interest rate

How the two pricing models actually work.

Factor RateInterest Rate
Example1.3 on $50K = $65K backAPR on the balance
Reduces as you pay?NoYes
Common onMCAs, some advancesTerm loans, lines of credit
Best whenFast, credit-flexibleLower total cost

How to lower your effective cost

  • Compare revenue-based funding vs a straight MCA
  • Use a line of credit and pay interest only on draws
  • Avoid stacking multiple advances
  • Repay faster where terms allow
  • Ask for the total payback, not just the factor
  • FICO 500+ still qualifies for lower-cost options

What you need to apply

  • US-based operating business
  • 6+ months in business
  • ~$20,000+ in monthly revenue
  • Last 3 months of bank statements
  • Valid EIN and business bank account

Frequently asked questions

What is a factor rate?
A multiplier applied to the funded amount to set total payback. A $50,000 advance at a 1.3 factor rate repays $65,000.
How is a factor rate different from interest?
Interest is charged on the remaining balance and drops as you pay down; a factor rate is fixed on the original amount and doesn't reduce.
How do I calculate the true cost?
Multiply the funded amount by the factor rate to get total payback, then compare that to interest-based options over the same term.
Can I get a lower-cost option?
Often yes — revenue-based funding or a line of credit can carry a lower effective cost than a straight MCA.
Does FICO 500+ still qualify for cheaper options?
Yes — approval is weighted toward revenue, so credit-challenged businesses can still access lower-cost structures.

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Figures shown are typical 2026 industry ranges and vary by underwriting; actual terms are set at application. Funding is subject to approval. Product and company names referenced are the property of their respective owners.

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Before you go

See how much your business qualifies for

$25K–$5M · funded in 24 hours · 500+ credit OK. A soft credit pull that will not affect your score.

START MY 1-MINUTE APPLICATION →

No obligation · takes about a minute