Is it legal for a broker to refuse to quote APR?

In 35 US states, yes — there's no federal MCA disclosure requirement. In five states (California SB 1235 / SB 362, New York, Utah, Virginia, Connecticut — with Florida and Texas drafting in 2026), commercial financing brokers must disclose an APR-equivalent or 'estimated annual percentage rate' on every commercial offer above a state-defined threshold. Outside those states, the broker can legally quote only factor rate. Whether they should is a different question.

What's the APR-equivalent on a 1.30 factor rate?

For a 1.30 factor over a typical 9-month MCA term (the median in 2026), the APR-equivalent is approximately 73%, computed from the payment schedule (the rate at which the daily debits pay back the advance). For a 12-month term, it drops to about 55%. For a 6-month term (more common on smaller advances), it jumps to about 109%. Factor rate looks small because it hides the term. APR makes the term visible.

Why is the APR-equivalent so much higher than the factor rate makes it sound?

Because daily ACH repayment compresses the effective interest period. When you take $50,000 and repay $65,000 over 9 months via daily debits, you start paying the advance back the next business day, so you have the full $50,000 for only a short time — but you pay the whole $15,000 fee anyway. Computed from the payment schedule, the APR-equivalent is about 73%. Factor rate (1.30 = $15K cost on $50K) sounds like 30%, but the math is doing different work than APR math.

How much commission does a broker make on a typical MCA?

Public ISO commission schedules from major funders run 8-19% of the funded amount. On a $50,000 advance at the midpoint (13%), the broker takes $6,500. Some funders also pay 'bonus tiers' (extra 1-4% for volume) and renewal commissions. Stack commission, factor rate markup, and 'PSF' (program service fee) and a broker can be earning $8,000-$10,000 on a deal that costs the merchant $20,000 over 9 months.

How do I get a broker to quote APR if they don't want to?

Ask in writing — email or text. Brokers who refuse to commit anything in writing about APR are signaling something. If they push back, ask for the full offer letter and run the math yourself with a calculator (factor × advance = total payback; subtract advance for total fees; then use APR formula based on amortization schedule). Or use a free tool that does it for you — that's literally why we built /calculator at Fundnode.

Why MCA Brokers Won't Quote APR — And What It Costs You

Most MCA brokers will give you a factor rate and refuse to translate it into APR. The math shows why: the spread between factor and APR is where the commission hides. Here's the honest version — with real numbers and a fix.

TL;DR

MCA brokers quote factor rates (1.30, 1.40) instead of APR because factor rate sounds smaller than the real cost. A 1.30 factor over 9 months is approximately 73% APR-equivalent (computed from the payment schedule). The broker's commission (8-19% per public ISO schedules) and the funder's markup are easier to hide inside a number that looks small. Fix: ask for APR in writing, or run the factor through a free calculator that shows you both.

The conversation that started this article

A restaurant operator in Tampa called us in March 2026. He'd been quoted a $75,000 MCA at a "1.34 factor" from a broker his POS provider had referred him to. He asked me one question: "Is that good?"

I asked him what the term was. He said 9 months. I asked what the daily ACH was. He said $507.58.

Math: $75,000 advanced × 1.34 factor = $100,500 total payback — $25,500 in fees. Spread over 22 business days a month for 9 months (198 payments), that is $507.58 a day. The APR-equivalent of a 1.34 factor on a 9-month schedule, computed from the payment schedule, is approximately 78%.

He had no idea. The broker hadn't mentioned APR. The offer letter listed the factor rate, the daily payment, and the total payback — and somehow not the annualized cost of capital. He thought he was paying "34%" because that's what 1.34 sounds like.

Why the spread between factor and APR matters

Factor rate compares total fees to the advanced amount. APR-equivalent is the annual rate at which your actual payment schedule pays back the advance. Those are two different math problems.

When you take $50,000 as an MCA and repay $65,000 via daily ACH over 9 months, your average outstanding balance over the life of the advance is well below $50,000 — because you're paying it down every business day. Computed from the payment schedule, the APR-equivalent is about 73%. Even at 9 months that is far above the 30% the factor rate suggests, and the gap widens quickly on shorter terms.

Factor rate (1.30 = $15K cost on $50K) makes that sound like 30%. The gap between "30%" and the annualized number — 73% at 9 months, 109% at 6 months, 217% at 3 months — is where a lot of broker conversations live. If a broker can keep your attention on the factor rate, you compare 1.30 (looks small) to 1.40 (looks slightly bigger) and pick the smaller one. If they let you see the APR, you might compare 73% APR to a Bluevine LOC at 14% APR and walk away from the entire category.

What the broker is actually earning

The publicly available ISO commission schedules from major MCA funders tell a clear story. Here are 2026 numbers from our research:

Funder	Published ISO commission	Bonus tiers
Greenbox Capital	Up to 19%	Volume bonuses available
Accord Business Funding	Up to 15%	+4% monthly volume bonus, 100% on renewals
CFG Merchant Solutions	3-5% origination + spread	No PSFs per industry reports
Rapid Finance	Up to ~5% of financing per archived materials	Embedded SaaS programs
OnDeck	High broker bar (most go direct)	2+ years operating, $1M+/mo volume required

On a $50,000 advance through a Greenbox broker, the broker can earn up to $9,500 at the published maximum. Average across the market is closer to 8-12%, but the published ceiling is the published ceiling.

Now look at what happens to your factor rate when a broker adds margin: the factor isn't set by the funder alone. Brokers often quote 1.40 when the funder's underwritten factor was 1.30. The extra 0.10 is the "buy-rate spread" — the broker's margin baked into the factor. On a $50K advance, that's an extra $5,000 you pay, on top of any base commission. You don't see that spread anywhere on the offer letter.

What the disclosure states require

The regulatory trajectory is clear, and it's moving toward required APR disclosure on commercial financing. As of mid-2026:

California SB 1235 / SB 362 — requires APR-equivalent disclosure on all commercial financing offers above $5,000. Full enforcement began January 2026. Major funders had to rebuild their offer letter templates.
New York Commercial Finance Disclosure Law — similar APR-equivalent disclosure for offers above $2,500. NY Department of Financial Services has been writing detailed implementation rules through 2025-2026.
Utah, Virginia, Connecticut — adopted standardized cost-disclosure requirements through 2023-2024, though without an APR mandate.
Florida (HB 1353, applying to transactions from January 1, 2024) and Texas (HB 700, effective September 2025 — often miscited as SB 1280, a companion bill that died) — both enacted. Neither mandates an APR figure, but Texas HB 700 is one of the broader recent changes affecting MCA brokers: OCCC registration by December 31, 2026, voided confession-of-judgment clauses, and ACH auto-debit restrictions.

The pattern: states are moving toward the same kind of disclosure regime that TILA created for consumer credit in the 1960s. Today, no consumer in America can be quoted a 24-month auto loan in "factor rate" terms — federal law requires the APR. Commercial MCA quietly operates outside that regime. That's changing, state by state.

The honest fix you can deploy today

Three things you can do this week, regardless of which state you operate in:

Ask for APR in writing. Email or text: "Can you give me the APR-equivalent on this offer?" If the broker won't commit anything in writing, that's a signal — it means the difference between factor and APR is large enough that the broker doesn't want it on the record.
Run the math yourself. Take the advance amount, multiply by the factor rate, subtract the advance. That's your total fees. Then find the rate at which your daily payments pay back the advance and annualize it (that is the APR computed from the payment schedule). Or use a free calculator — we built /calculator exactly for this. Enter advance, factor, term. Get APR-equivalent immediately.
Compare against your real alternative. Not against another MCA — against your real alternative. Bluevine LOC at 14% APR. OnDeck term loan at 27% APR. SBA 7(a) at 11-13% APR. If you qualify for any of those, the MCA almost certainly loses. See our MCA vs LOC vs term loan piece for the side-by-side math.

Why we built Fundnode to show APR by default

The 8-12 point commission spread isn't inherent to the product — it's a function of the current information asymmetry. When the merchant can't see APR, the broker can compete on factor rate appearance, and the spread stays large. When the merchant can see APR, brokers compete on APR — and the spread compresses, because no merchant willingly accepts a 73% APR when a 27% term loan is on offer.

So at Fundnode, every quote we route shows the APR-equivalent alongside the factor rate. Not because we're saintly — because we want the merchant to make a comparison that includes their cheaper alternatives. When they do, the wedge moves: deals we route that would have gone to MCA migrate to LOC or term loan instead. The merchant saves. The funder we route to (whether MCA or LOC) gets a merchant who actually understands the deal and won't default out of confusion six months later.

The point of this article isn't to tell you brokers are bad. Most aren't. The point is: the math is set up so that even good brokers face a powerful incentive to keep APR invisible. You can fix that, today, by asking for it in writing.

Frequently asked questions

Is it legal for a broker to refuse to quote APR?: In 35 US states, yes — there's no federal MCA disclosure requirement. In five states (California SB 1235 / SB 362, New York, Utah, Virginia, Connecticut — with Florida and Texas drafting in 2026), commercial financing brokers must disclose an APR-equivalent or 'estimated annual percentage rate' on every commercial offer above a state-defined threshold. Outside those states, the broker can legally quote only factor rate. Whether they should is a different question.
What's the APR-equivalent on a 1.30 factor rate?: For a 1.30 factor over a typical 9-month MCA term (the median in 2026), the APR-equivalent is approximately 73%, computed from the payment schedule (the rate at which the daily debits pay back the advance). For a 12-month term, it drops to about 55%. For a 6-month term (more common on smaller advances), it jumps to about 109%. Factor rate looks small because it hides the term. APR makes the term visible.
Why is the APR-equivalent so much higher than the factor rate makes it sound?: Because daily ACH repayment compresses the effective interest period. When you take $50,000 and repay $65,000 over 9 months via daily debits, you start paying the advance back the next business day, so you have the full $50,000 for only a short time — but you pay the whole $15,000 fee anyway. Computed from the payment schedule, the APR-equivalent is about 73%. Factor rate (1.30 = $15K cost on $50K) sounds like 30%, but the math is doing different work than APR math.
How much commission does a broker make on a typical MCA?: Public ISO commission schedules from major funders run 8-19% of the funded amount. On a $50,000 advance at the midpoint (13%), the broker takes $6,500. Some funders also pay 'bonus tiers' (extra 1-4% for volume) and renewal commissions. Stack commission, factor rate markup, and 'PSF' (program service fee) and a broker can be earning $8,000-$10,000 on a deal that costs the merchant $20,000 over 9 months.
How do I get a broker to quote APR if they don't want to?: Ask in writing — email or text. Brokers who refuse to commit anything in writing about APR are signaling something. If they push back, ask for the full offer letter and run the math yourself with a calculator (factor × advance = total payback; subtract advance for total fees; then use APR formula based on amortization schedule). Or use a free tool that does it for you — that's literally why we built /calculator at Fundnode.

Why MCA brokers won't quote APR — and what it costs you.