Why isn't APR printed on my MCA contract?

MCAs are technically not loans — they're a purchase of future receivables — so federal Truth-in-Lending APR disclosure rules don't apply. Most funders deliberately quote 'factor rate' and 'total payback' instead because the same cost expressed as APR sounds far more expensive. New York (NYDFS Section 803), California (SB 1235), Virginia, Utah, Georgia, and several other states now require APR-equivalent disclosure at the point of offer, but only for transactions originated in or to those states and only above certain thresholds.

Which APR formula does this calculator use?

It uses the NYDFS Section 803 simplified formula: APR = ((Factor − 1) × 365 × 2) / (Term × (1 + Factor)). California SB 1235 uses a substantively similar formula. This approximation accounts for the fact that the merchant is paying down principal continuously through daily ACH, which means the average outstanding balance is roughly half the original advance. For a 1.32 factor over 270 days that produces approximately 86% APR.

Why is the APR so much higher than the factor rate suggests?

A factor of 1.32 looks like 32% interest on its face, but the term is usually 6–12 months — not a year. Annualizing the cost and accounting for amortization (you're paying principal down daily, so the average outstanding balance is roughly half) typically multiplies the headline cost by 2.5–3.5×. A 12-month MCA at 1.32 factor is roughly equivalent in true cost to a 65–85% APR term loan.

Is the APR-equivalent the actual cost I'll pay?

No — the total payback (advance × factor) is what you'll actually pay in dollars, and that number is fixed. APR-equivalent is an apples-to-apples comparison metric. It lets you compare an MCA to a 7-year SBA loan, a 12-month term loan, or a line of credit. If two products have the same APR, they have the same effective cost of capital, even though their payment shapes and term lengths differ.

What APR is considered 'good' for an MCA in 2026?

There's no such thing as a cheap MCA — even A-paper pricing (1.18–1.24 factor over 9–12 months) lands at 35–60% APR. B-paper (1.28–1.38) is typically 60–110% APR. C-paper (1.40–1.50) is often 110–200% APR. If you qualify for an SBA Express loan (prime + 4.5–6.5%, roughly 12–14% APR right now) or a Bluevine line of credit (15–30% APR), those are categorically cheaper than even the best MCA.

Fundnode — Funding for small businesses. No broker games.

Most MCA brokers refuse to quote APR — by design. Type your factor rate, advance amount, and term to see the APR-equivalent under the NYDFS Section 803 disclosure formula. Compare apples-to-apples with term loans and lines of credit.

Your offer

Factor ratee.g. 1.18 (A-paper) to 1.50 (D-paper)Advance amount ($)Term (days)typically 90-540

APR-equivalent (A-paper)

37.3%

Comparable to a high-rate term loan.

Total payback

$66,000

Total fee

$16,000

Daily ACH (approx)

$244

How the conversion works

A factor rate is a multiplier. A 1.32 factor on a $50,000 advance means $66,000 total payback — a $16,000 fee. On its face it sounds like 32% interest. But the term is rarely a year, and you're paying the principal down continuously through daily ACH, so the average outstanding balance is roughly half the original advance.

The NYDFS Section 803 formula corrects for both effects:

APR = ((Factor − 1) × 365 × 2) / (Term × (1 + Factor))

The 365 annualizes the cost. The ×2 accounts for continuous amortization. Dividing by (1 + Factor) normalizes against the time-weighted average balance. The result is what a bank or credit union would call APR on the same dollar fee.

What the bands mean

Under 40% APR (A-paper). You qualify for the best MCA pricing — but at this band you almost certainly also qualify for a term loan or LOC that's categorically cheaper. Check before signing.
40–80% APR (B-paper). Typical mid-market MCA. Material premium over conventional credit. Worth taking only if you have a specific revenue-generating use case (inventory, payroll bridge, equipment) that pays back the spread.
80–140% APR (C-paper). Steep. Often broker-placed with embedded commission. Verify there's no cheaper option — fully half the merchants at this band qualify for B-paper directly but are placed at C-paper because the broker earns a larger commission.
140%+ APR (D-paper). Distressed-tier pricing. Default rates at this band exceed 60% within 12 months. Almost always a sign that the merchant should be evaluating alternatives, not financing.

Methodology

The APR calculation uses the simplified NYDFS Section 803 formula adopted in New York, mirrored by California SB 1235 and substantively similar to disclosure formulas in Virginia, Utah, Georgia, and several other states. Daily payment assumes the standard MCA structure of fixed daily ACH on business banking days. Real-world MCA contracts vary — some use weekly ACH, some specify a percentage of daily card volume — but the APR-equivalent is invariant to the payment cadence.

The output is an estimate for cost comparison. It is not financial or legal advice. Specific APR disclosures on regulated MCA offers should be sourced from the funder's required disclosure form.

Frequently asked questions

Why isn't APR printed on my MCA contract?: MCAs are technically not loans — they're a purchase of future receivables — so federal Truth-in-Lending APR disclosure rules don't apply. Most funders deliberately quote 'factor rate' and 'total payback' instead because the same cost expressed as APR sounds far more expensive. New York (NYDFS Section 803), California (SB 1235), Virginia, Utah, Georgia, and several other states now require APR-equivalent disclosure at the point of offer, but only for transactions originated in or to those states and only above certain thresholds.
Which APR formula does this calculator use?: It uses the NYDFS Section 803 simplified formula: APR = ((Factor − 1) × 365 × 2) / (Term × (1 + Factor)). California SB 1235 uses a substantively similar formula. This approximation accounts for the fact that the merchant is paying down principal continuously through daily ACH, which means the average outstanding balance is roughly half the original advance. For a 1.32 factor over 270 days that produces approximately 86% APR.
Why is the APR so much higher than the factor rate suggests?: A factor of 1.32 looks like 32% interest on its face, but the term is usually 6–12 months — not a year. Annualizing the cost and accounting for amortization (you're paying principal down daily, so the average outstanding balance is roughly half) typically multiplies the headline cost by 2.5–3.5×. A 12-month MCA at 1.32 factor is roughly equivalent in true cost to a 65–85% APR term loan.
Is the APR-equivalent the actual cost I'll pay?: No — the total payback (advance × factor) is what you'll actually pay in dollars, and that number is fixed. APR-equivalent is an apples-to-apples comparison metric. It lets you compare an MCA to a 7-year SBA loan, a 12-month term loan, or a line of credit. If two products have the same APR, they have the same effective cost of capital, even though their payment shapes and term lengths differ.
What APR is considered 'good' for an MCA in 2026?: There's no such thing as a cheap MCA — even A-paper pricing (1.18–1.24 factor over 9–12 months) lands at 35–60% APR. B-paper (1.28–1.38) is typically 60–110% APR. C-paper (1.40–1.50) is often 110–200% APR. If you qualify for an SBA Express loan (prime + 4.5–6.5%, roughly 12–14% APR right now) or a Bluevine line of credit (15–30% APR), those are categorically cheaper than even the best MCA.