Glossary
Factor rate
A factor rate is a multiplier used to price a merchant cash advance. Multiply the advance by the factor rate to get the total amount you'll remit.
In plain terms
A $50,000 advance at a 1.25 factor rate means you'll remit $62,500 in total. The $12,500 difference is the cost. Unlike an interest rate, it doesn't change with time: paying faster doesn't lower it unless your offer includes an early payoff discount.
Why it matters when you're getting funded
Factor rates look small next to APRs, but they apply to the full amount over a short term. Every Tovah offer also shows an estimated annualized cost so you can compare an advance to a loan on equal footing.
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