What is a factor rate on a merchant cash advance?

A factor rate (e.g., 1.25, 1.40) is the total repayment multiplier on the amount advanced. If you receive $50,000 at factor 1.30, you repay $65,000 total regardless of how quickly you pay it back. Factor rates cannot be directly compared to APR without knowing the repayment term — this calculator converts both to effective APR for a fair comparison.

When does a merchant cash advance make sense?

MCAs may make sense when: (1) you cannot qualify for a bank loan, (2) you need capital within 24-48 hours, or (3) the business opportunity funded by the advance has a return that far exceeds the MCA cost. They rarely make sense as a routine financing tool due to the high effective cost. Always convert the factor rate to APR before accepting any MCA offer.

Are the results personalized financial advice?

No. Calculator outputs are educational estimates based on the inputs you enter. Review assumptions and confirm terms directly with providers before making a financial decision.

What should I do after seeing the result?

Use the recommendation module on this page to compare small business loan rates, or run Money Map to compare this loans & credit decision with your other opportunities.

How does SwitchWize choose related offers?

Related offers are matched by the calculator surface (loans) and ranked using SwitchWize data such as rate, fees, trust signals, product fit, and switching friction. Paid relationships do not change organic ranking order.

How fresh are the rates and offers shown?

Rate and offer data is reviewed on a recurring cadence and every offer module shows review context or links to the methodology and disclosure pages.

Where can I see the ranking methodology?

The SwitchWize methodology page explains how rate freshness, editorial review, affiliate disclosure, and category ranking factors work.

Can Money Map use this result?

Yes. Money Map is the broader diagnostic path: it compares savings, mortgage, cards, and debt so you can see whether this calculator result is your highest-impact next move.

New

Small Business Loan Calculator — Term Loan vs Merchant Cash Advance

Compare a traditional term loan against a merchant cash advance side-by-side. See monthly payment, total interest, all-in cost, and the effective APR on any MCA factor rate.

Monthly Payment

$2,052

Monthly Payment

$2,052

Total of All Payments

$123,099

Total Interest Paid

$23,099

Origination Fee

$1,000

Monthly Payment: $2,052Total of All Payments: $123,099Total Interest Paid: $23,099Origination Fee: $1,000

All-In Borrowing Cost

$24,099

MCA Total Repayment

$125,000

MCA Finance Charge

$25,000

MCA Effective APR (approx.)

25.00%

Diagnostic

This loan costs $24,099 total (interest + origination fee) over 5 years. A merchant cash advance at the same amount with a 1.25 factor rate costs $25,000 — an effective APR of approximately 25.

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What to do next

Compare small business loan rates

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This is an educational estimate, not tax, legal, investment, or lending advice. Tax rules, rates, and eligibility change and depend on your full situation. Confirm with a qualified professional or the provider before acting.

Coach Insight

Merchant cash advances (MCAs) are marketed aggressively to small business owners who cannot qualify for bank loans. A factor rate of 1.3 sounds reasonable until you see that a 6-month MCA at factor 1.3 equates to roughly 100%+ APR. This calculator makes that comparison concrete so you can evaluate both options on the same basis.

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Reviewed Jun 24, 2026 · Methodology

Advertising disclosure: SwitchWize may earn a referral fee if you open an account through a link above. This does not affect our rankings. Ranked using the SwitchWize methodology. Learn more

Frequently Asked Questions

Everything you need to know.

Why This Matters

How to Use It

1Enter your loan amount, APR, and term for the traditional loan
2Enter the MCA factor rate and estimated repayment term in months
3Compare all-in cost and effective APR side-by-side
4Use the result to decide whether the MCA premium is justified by your qualifying constraints

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