Merchant Cash Advance Rates

The short answer: Merchant cash advance rates are not quoted as annual percentage rates. They're quoted as factor rates — a decimal multiplier that sets your total payback. Because an MCA is repaid over months rather than years, that factor rate translates into an annualized cost far higher than the number itself suggests. To compare MCA rates honestly, convert the factor rate into an APR-equivalent before deciding.

How MCA rates are quoted

A funder offers you an advance at a factor rate — say, 1.3. That single number determines everything: your total payback (advance × factor rate), the fee you pay for the capital, and — combined with the payment schedule — how fast the money leaves your account. There is no amortization schedule and no compounding interest; the cost is fixed at signing. The factor rate page walks through the math in detail.

What drives your MCA rate

Funders price each offer based on the risk they perceive, not on a published rate sheet. The main factors are:

• Time in business — longer operating history generally means better pricing.
• Monthly revenue and consistency — steady, predictable deposits signal reliable repayment.
• Personal credit — a stronger score can improve the factor rate you're offered.
• Industry risk — some sectors are priced higher regardless of the individual business.
• Advance size and term — larger or longer advances may carry different pricing.

Because pricing is individualized, there is no single "going rate" for an MCA. Any specific average quoted without a source should be treated with skepticism.

Why the factor rate understates the real cost

A 1.3 factor rate sounds like "30%," but that figure is not annualized. On a $50,000 advance repaid over 9 months, the fee is $15,000 — and the annualized cost is roughly 40%, not 30%. Shorten the term to 6 months and the annualized cost climbs further. The same factor rate means very different annualized costs depending on how quickly you repay.

How to compare MCA rates

Line up the total payback, the payment amount and frequency, and the estimated term for every offer, then convert each to an APR-equivalent. The offer with the lowest factor rate is not always the cheapest once term and frequency are accounted for. Use the MCA calculator to run the numbers on a specific offer, and see the full merchant cash advance guide for the broader context.