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FundingForBusinesses

Independent research · Not a lender or broker · We never take applications|Disclosures

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Compare two financing offers

You cannot compare 11% to a 1.28 factor by looking at them. This converts both to a true APR, a monthly cash-flow burden, and a total cost of money, so the comparison is actually a comparison.

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Offer A

Priced as

True APR

11.0%

Monthly

$2,174

Total repaid

$130,455

Cost of money

$30,455

Offer B

Priced as

True APR

57.1%

Monthly

$12,800

Total repaid

$128,000

Cost of money

$28,000

Verdict

Offer B costs $2,455 less in total. The monthly cash-flow burden is $2,174 against $12,800.

Cheaper in total is not always the right answer. A longer, cheaper loan with a lower payment protects cash flow; a shorter, more expensive one clears the balance sheet faster. What is never right is comparing a factor rate to an interest rate without converting both to APR - which is what this does.

This calculator runs entirely in your browser. Nothing you type is sent to us, stored, or shared. Results are estimates for comparison only - they are not an offer, a quote, or advice, and your actual terms will be set by a lender.

Total cost is not the only question

The cheapest offer in total dollars often has the highest monthly payment, because it is shorter. A business whose constraint is cash flow may rationally take the more expensive loan with the lower payment - but it should do so knowing the price, which is what this calculates.

What is not modelled here

Prepayment penalties, covenants, collateral requirements, personal guarantees, and the cost of a blanket lien on your assets. Those frequently matter more than a two-point rate difference and none of them appear in an APR.

Questions

Should I always take the lower APR?
Usually, but not always. Compare the monthly burden and the non-price terms too - a covenant that trips on one bad quarter can cost far more than a couple of points.

We are a publisher, not a lender or broker. We never take applications and are never paid by borrowers. Read the full disclosures.