How to Calculate Business Loan & Credit Line True Cost
Converts factor rates and daily repayments into an APR you can actually compare.
How this number is built
Calculating it yourself
Step 1
Ask for the total repayment amount in dollars, not just the rate.
Step 2
For a merchant cash advance, convert the factor rate — 1.25 means you repay 125%.
Step 3
Subtract origination fees from the cash you actually receive before computing APR.
Step 4
Include maintenance and draw fees on a revolving line, which are easy to overlook.
Step 5
Compare every option on APR, then on whether the repayment schedule fits your cash cycle.
What people ask next
What is a factor rate?
A multiplier on the amount funded. At 1.3 on $100,000 you repay $130,000 regardless of how quickly you repay it, which is why fast repayment raises the effective APR.
Is a credit line cheaper than a term loan?
Often, if you draw sparingly. If you keep it fully drawn permanently, it behaves like an expensive term loan with fees on top.
Searches this page answers
| Related search | Goes to |
|---|---|
| credit line for businesses | Business Loan & Credit Line True Cost Calculator |
| company credit line | Business Loan & Credit Line True Cost Calculator |
| business loan | Business Loan & Credit Line True Cost Calculator |
| merchant cash advance apr | Business Loan & Credit Line True Cost Calculator |
Tools that follow from this one
ROI & Payback Calculator
Return, annualised return and payback period for any investment or project.
Business & TechBreak-Even Point Calculator
Units and revenue needed to cover fixed costs, plus margin of safety.
Business & TechCAC & LTV Calculator
Customer acquisition cost, lifetime value and the ratio investors ask about.
Business & TechHosting & Cloud Cost Calculator
Monthly infrastructure spend across compute, bandwidth, storage and support.