The annualised cost of financing, accounting for the repayment schedule as well as the amount charged.
The same 1.35 factor can be roughly 46% APR over eighteen months or around 145% over six — the factor did not change, only the term did. Several state disclosure regimes now require cost expressed in comparable terms rather than as a factor alone.
Factor rate
A multiplier applied once to an advance amount to give the total repayment — a $50,000 advance at 1.40 means $70,000 repaid.
Total payback
The full amount a merchant repays, calculated as the advance multiplied by the factor rate.
Commercial financing disclosure law
State legislation requiring standardised cost disclosures to a business before it signs a financing agreement.
Usury
A legal cap on the interest rate that may be charged on a loan.
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