What does my MCA actually cost in APR terms? Merchant cash advances quote factor rates; term loans, lines of credit, and SBA loans quote APR — and converting between them is the only honest way to compare offers. This calculator does the conversion both ways: the simple-cost APR (the offer-sheet number) and the true amortizing APR (the apples-to-apples-with-term-loan number).
Quick answer: Convert any MCA factor rate to APR in seconds — get the simple-cost number AND the true amortizing APR, with worked examples and a verdict on whether the math pencils.
Total payback = Advance × Factor rate Simple-cost APR ≈ (Factor − 1) × (12 / Term in months) Amortizing APR ≈ IRR of equal daily/weekly debits over the term (no early-payoff discount) Effective monthly cost = Total payback ÷ Term in months
Assumptions
Total payback $64,000 ($14,000 cost). Simple-cost APR ≈ 37%, amortizing APR ≈ 56% — high-cost capital that only pencils against a high-margin, fast-turn use of funds (seasonal inventory, time-sensitive ad spend, etc.).
Total payback $140,000 ($40,000 cost). Simple-cost APR ≈ 40%, amortizing APR ≈ 64%. At this price, a term loan refi typically saves $15K – $25K over the life if the file qualifies — run the MCA Refinance Calculator.
Total payback $38,750 ($13,750 cost). Simple-cost APR ≈ 110%, amortizing APR ≈ 175%. Math only works for a use of funds that produces >$13,750 of net incremental cash flow in the same 6 months — verify before signing.
A factor rate is a multiplier on the advance amount that determines total repayment. A 1.28 factor rate on $50,000 means you'll repay $64,000 total — regardless of how fast you pay it back. It's the standard pricing convention for merchant cash advances (MCAs), short-term working capital advances, and some revenue-based financing products.
APR is annualized cost of borrowing. Factor rates ignore time — a 1.28 factor over 9 months and a 1.28 factor over 18 months cost the same dollars, but the 9-month version is roughly twice as expensive in APR-equivalent terms because the money's tied up half as long. APR forces time into the math; factor rates hide it.
Simple-cost APR assumes the full principal is outstanding for the entire term. Amortizing APR accounts for daily/weekly debits paying down principal as you go (which raises the effective rate because you're financing a shrinking balance). Both are technically correct — use simple-cost for vendor comparison, amortizing for true-cost reasoning vs term loans.
MCA factor rates in 2026 typically run 1.15 – 1.55. Stronger files (steady deposits, no recent stacking, clean banking history) price toward the bottom of that range; thinner or riskier files price toward the top. Anything above 1.55 is unusually expensive and worth pushing back on or shopping elsewhere — at the same term it implies an effective APR well north of 80%.
On a 6-month MCA, a 1.20 factor is roughly a 40% simple APR and a typical mid-market price for a clean file. A 1.30 factor at 6 months is closer to a 60% simple APR — that's not 'fraud,' but the math only pencils for fast-turn, high-margin uses of funds. Short terms compress APR dramatically; the same factor at 12 months is half the APR.
Often yes — if a term loan APR is at least 15-20 points below the MCA's effective amortizing APR AND the new monthly payment is below your current monthly debit, the refi pencils on both axes. Run the numbers in our MCA Refinance Calculator before committing — there are scenarios where total interest drops but monthly burden rises, which is the wrong trade if cash flow is the binding constraint.
Usually not. Most MCAs have no prepayment discount — the total payback is fixed at funding (Advance × Factor rate), so paying off early just front-loads the cost without reducing it. A small number of products offer 'early discount' tiers; read the agreement before assuming. The cleanest way to lower MCA cost is refinance, not prepay.
The simple-cost APR is exact for products with no origination fee, no ACH fee, and no early-payoff discount — which is most MCAs. The amortizing APR is computed as the IRR of equal daily/weekly debits and is accurate to within ~1% in normal cases. Layered fees (origination, COJ, ACH) raise the true APR further and aren't included in either number — add them on top.