Factor rate calculator: factor rate to APR
Merchant cash advances, revenue-based finance and some short-term loans are priced with a factor rate, such as 1.20, rather than an annual rate. Enter the amount, factor rate and repayment period to see the equivalent APR, or switch to “APR to factor rate” to go the other way.
Equivalent APR
41.30%
- Nominal annual rate (monthly × 12)
- 35.07%
- Monthly repayment
- €2,000.00
- Total repayable
- €24,000.00
- Cost of the finance
- €4,000.00
- Equivalent flat rate (per year)
- 20.00%
Assumes equal repayments over the term, as often as you choose above. A merchant cash advance is collected every business day, which gives a higher APR than the same factor rate repaid monthly.
Check eligibility for this amountIllustrative only. Actual rates, fees and terms depend on your circumstances and the lender. This is not an offer of finance.
How this calculator works
A factor rate sets the total you repay: €20,000 at 1.20 means €24,000. It does not depend on how long you take to repay, so the shorter the period, the higher the cost per year.
The calculator finds the monthly interest rate that would give the same total with equal monthly repayments over your chosen period, then shows it as an equivalent APR (effective, with monthly compounding) and as a nominal annual rate.
For illustration only: €20,000 at a factor rate of 1.20 repaid over 12 months costs €4,000, about €2,000 a month, an equivalent APR of about 41.30%. Repaid over 6 months, the same €4,000 cost is an equivalent APR of about 89.5%.
The “APR to factor rate” mode works backwards: enter an APR and term to see the matching factor rate, monthly repayment and total cost. It helps you compare a factor-rate offer with a loan quoted as an annual rate. Business lenders in Ireland do not have to quote an APR (that legal duty comes from consumer credit law), so this is an equivalent APR worked out from equal monthly repayments, for comparison only.
Want to understand the product first? Read our guide to merchant cash advance.
Factor rate calculator: factor rate to APR: common questions
What is a factor rate?
A multiplier that sets the total repayable. A factor rate of 1.20 means you repay €1.20 for every €1 advanced, so €20,000 becomes €24,000. It is a fixed cost, not an annual interest rate, and it is common for merchant cash advances and revenue-based finance.
How do you convert a factor rate to an APR?
Multiply the amount by the factor rate to get the total repayable, then find the monthly interest rate that would produce the same total with equal monthly repayments over the period. Expressed annually with monthly compounding, that is the equivalent APR. This calculator does it for you instantly.
Is a factor rate of 1.2 the same as 20% interest?
No. 20% is the total cost as a share of the amount, regardless of time. Repaid over 12 months, a 1.20 factor rate is about 41% APR, because you are paying back the money throughout the year. Over 6 months it is close to 90%.
What factor rates are common in Ireland?
Providers set their own pricing and few publish it, so ask each one for the factor rate, total repayable and any fees in writing. Use this calculator to see how the cost compares with a loan at an annual rate over the same period.
Why does a merchant cash advance have no fixed term?
Because it is repaid as a share of your card takings. Busy months repay it faster and quiet months slower, but the total stays the same. A faster repayment means a higher equivalent APR. Our merchant cash advance calculator estimates the time to repay from your takings.
Can I repay a factor-rate advance early to save money?
Often not: the fee is usually fixed from the start, so repaying early may not reduce it. Some providers offer a discount for early settlement. Ask before you sign, and get the answer in writing.
Does Welcome Finance arrange merchant cash advances?
Yes, merchant cash advances and revenue-based finance are among the products our specialist lender panel covers, for Irish limited companies that meet the lenders’ criteria. Approval and pricing are the lender’s decision. Welcome Finance is a commercial finance broker, not a lender, and is not regulated by the Central Bank of Ireland.
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Checking involves no credit search and is not recorded on the Central Credit Register. No obligation.
- No credit search, not recorded on the Central Credit Register
- One request, several lenders: we’re a broker, not a lender
- For limited companies registered in Ireland
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