Glossary
Factor rate
A multiplier used to price merchant cash advances - not an interest rate and not comparable to one.
A factor rate is multiplied by the advance to give the total repayable. A 1.35 factor on $50,000 means repaying $67,500 regardless of how long it takes.
Because there is no accrual on a declining balance, repaying faster does not reduce the amount owed - it raises the effective APR. Converting a factor rate to an APR requires the repayment period and frequency as well as the factor.
See also
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