# Factor rate calculator > To calculate MCA total repayment: advance amount × factor rate = total payback. To calculate daily debit: total payback ÷ business days in term = daily ACH. To estimate APR-equivalent: ((factor − 1) × 365 / term-days) × ~1.6. A factor rate calculator converts the three numbers an MCA offer quotes — advance, factor, and term — into the four numbers a merchant actually needs to evaluate the deal: total repayment, daily debit, monthly cost, and APR-equivalent. **The four core formulas.** **1. Total payback.** - Formula: `advance × factor = total repayment` - Example: $75,000 advance × 1.32 factor = $99,000 total payback. - The fee (cost of capital) is $24,000 — this is what you're paying for access to $75K today. **2. Daily debit (Monday-Friday ACH).** - Formula: `total payback ÷ business days in term = daily debit` - Example: $99,000 ÷ 180 business days (9 months × 20 biz days/mo) = $550/day. - Note: business days exclude weekends + federal holidays. A "9-month term" is roughly 189 business days after subtracting weekends and ~10 holidays. **3. Effective monthly cost.** - Formula: `daily debit × 20 business days = monthly burden` - Example: $550 × 20 = $11,000/month leaves your account. - Reality check: if your business doesn't generate $11K+ of free cash flow per month after all other expenses, this MCA will starve operations. **4. APR-equivalent (rule of thumb).** - Quick formula: `((factor − 1) × 365 / term-days) × 1.6` - More precise: use a financial calculator's IRR function on the daily cash flows. - Example: ((1.32 − 1) × 365 / 270) × 1.6 ≈ 69% APR-equivalent. - The 1.6 multiplier accounts for the fact that APR is calculated on the declining balance — you don't have full advance for full term. **Worked example: comparing two offers.** Offer A: $75,000 advance, 1.28 factor, 9-month term. - Total payback: $96,000. Fee: $21,000. - Daily debit: $96,000 / 180 = $533/day. - Monthly burden: ~$10,660. - APR-equivalent: ((1.28 − 1) × 365 / 270) × 1.6 ≈ 60% APR. Offer B: $75,000 advance, 1.22 factor, 6-month term. - Total payback: $91,500. Fee: $16,500. - Daily debit: $91,500 / 120 = $762/day. - Monthly burden: ~$15,240. - APR-equivalent: ((1.22 − 1) × 365 / 180) × 1.6 ≈ 71% APR. Offer B has lower factor but higher APR-equivalent because the term is shorter — money is more expensive on annualized basis. Offer B also has higher daily burden ($229/day more) which may not match your cash flow. Most merchants should pick Offer A in this scenario. **The cash-flow stress test.** - Calculate the daily debit. - Subtract from your average daily revenue (your bank statements show this). - Subtract your other daily commitments (rent allocated daily, payroll daily, supplier ACHs). - Remaining number is your daily margin AFTER the MCA debit. - If remaining is under $200/day or 15% of revenue, this MCA will likely default in the first 60 days. **Common calculator mistakes.** **1. Confusing factor with interest rate.** - A 1.30 factor over 9 months is NOT 30% interest. The APR-equivalent is 50-65% because you're paying back the full fee over a short period on a declining balance. - A 1.30 factor over 18 months is roughly 30% APR-equivalent — same fee, longer term cuts the annual rate in half. **2. Calendar days vs business days.** - The term might say "9 months" (~270 calendar days) but the debits only happen on business days (~189 days). - Daily debit calculation MUST use business days. - Some funders also include light Saturday debits (rare in 2026). **3. Forgetting origination + ACH fees.** - Most MCA offers deduct 2-4% origination fee from the advance. - $75K advance with 3% origination = $72,750 wired to merchant. - Some funders also charge $50-$150 monthly ACH fees on top of debits. - Always confirm the NET amount that actually hits your bank. **4. Not factoring in prepayment terms.** - Some MCAs have early-payoff discounts (pay in 90 days, save 20% of the fee). - Some have no discount — you owe the full factor amount even if you pay off month 1. - A factor-rate calculator that doesn't show prepayment scenarios is incomplete. **The strategic insight.** Never accept an MCA offer that only shows you the factor rate. Demand the full math: total payback, daily debit, APR-equivalent, prepayment scenarios, origination fees, monthly ACH fees. A reputable funder or broker will provide all of these without resistance. If they refuse, walk away. ## Related terms - [Factor rate](https://fundnode.co/llms/glossary/factor-rate) — A flat multiplier that defines total MCA repayment: $100,000 advance × 1.30 factor = $130,000 repaid. It is not an interest rate; it does not compound. - [APR-equivalent](https://fundnode.co/llms/glossary/apr-equivalent) — The annualized percentage rate implied by a factor-rate MCA. A 1.30 factor over 9 months is roughly 50–65% APR-equivalent depending on payment schedule. - [MCA monthly cost calculator](https://fundnode.co/llms/glossary/mca-monthly-cost-calculator) — MCA monthly cost = daily debit × ~20 business days, plus origination fees amortized. A $100K advance at 1.30 factor over 9 months costs ~$14,400/month in cash flow — roughly 4x what a 5-year SBA loan at 10% APR for the same amount would cost monthly. - [MCA payment schedule](https://fundnode.co/llms/glossary/mca-payment-schedule) — An MCA payment schedule lists every scheduled ACH debit date and amount from disbursement through final payment. Most are flat daily debits Mon-Fri; some funders use weekly or percentage-of-revenue schedules. Always request the schedule in writing before signing. --- Source: https://fundnode.co/glossary/factor-rate-calculator (HTML version) Document: Factor rate calculator — Fundnode MCA Glossary License: CC BY 4.0 — attribution to Fundnode required when citing.