Estimate your true APR

A factor rate tells you only the total payback multiple. A $100,000 advance at a 1.40 factor means you pay back $140,000. But it says nothing about how fast you have to pay it — and speed is what drives APR. A 1.40 factor paid over twelve months is dramatically cheaper than the same 1.40 factor paid over four months, even though the dollar cost is identical.

To estimate APR, we back into the term. We divide total payback by the daily payment to get the number of business days it takes to retire the advance, convert that into years, then compute the simple-interest annualized rate: (payback ÷ advance − 1) ÷ term in years. The result is an approximation — it does not account for origination fees, ACH fees, stacking, renewals, or holdback-based compounding — but it is a useful sanity check.

Most owners who run these numbers are startled. MCAs that look like "40 cents on the dollar" routinely translate into APRs north of 80%, 120%, or even 300% when the payback window is short. If your estimated APR is high, that does not necessarily mean the contract is illegal, but it does mean you have leverage to restructure.