# Invoice factoring cost calculator

**Short answer:** A $100,000 invoice factored at an 80% advance costs $3,000 if paid on day 50. The fee is 2% for 30 days plus 0.5% per added 10 days. That is 27.4% APR, under Regulation Z's single-payment method.

Canonical page: https://www.sbaexpress.loans/tools/invoice-factoring-cost/
Last checked: 2026-11-09

## How this is computed

The factor advances a share of the invoice and holds the rest as a reserve. When your customer pays, the factor keeps its fee and sends you the reserve less that fee.

```
fee % = first-period fee + added fee x added blocks
fee $ = invoice x fee %
APR   = (fee $ + other fees) / cash advanced x 365 / days
```

Each started block counts in full, so day 41 costs the same as day 50. The first period is a minimum. A customer who pays on day 10 still costs the full first-period fee.

A factoring deal is one advance and one repayment. [Regulation Z, Appendix J](https://www.consumerfinance.gov/rules-policy/regulations/1026/j/), paragraphs (b)(4)(ii) and (b)(5), treats the term as one period. It counts 365 divided by the days in the term as the periods in a year.

California and New York require covered factoring offers to show an APR. Both assume the invoice is paid on its due date ([Cal. Code Regs. tit. 10, § 941](https://www.law.cornell.edu/regulations/california/10-CCR-941); [N.Y. Comp. Codes R. & Regs. tit. 23, § 600.13](https://www.law.cornell.edu/regulations/new-york/23-NYCRR-600.13)).

This tool assumes the fee is charged on the invoice. If your factor charges on the cash advanced, multiply its fee by the advance rate before you enter it.

## A worked example

Take a $100,000 invoice sold at an 80% advance. The fee is 2% for the first 30 days, plus 0.5% for each added 10 days. Your customer pays on day 50. These figures are an illustration, not a quote.

The fee looks like 3%. On the cash you actually used, $3,000 on $80,000 for 50 days is 27.4% a year.

At SBA's maximum rate for $80,000, 13.00% today, a line of credit on the same cash would cost $1,425 in interest over those days. The factor's fee also buys collection work and, in a non-recourse deal, protection if your customer does not pay.

**A $100,000 invoice paid on day 50**

| Item | Amount |
| --- | --- |
| Cash you get now | $80,000 |
| Factoring fee | $3,000 |
| Reserve paid to you after collection | $17,000 |
| Total you keep | $97,000 |
| APR on the cash received | 27.4% |

SBA's rule on paying off a factor

Factoring agreements are not eligible for refinancing under SOP 50 10 8.1, App. 14, Para. A.2. [Read the full rule](https://www.sbaexpress.loans/answers/can-an-sba-loan-pay-off-a-factoring-agreement/).

## Common questions

### Why is the APR based on the advance and not the invoice?

The advance is the money you get to use. The reserve stays with the factor until your customer pays.

### What is the reserve?

It is the part of the invoice the factor holds back. It covers the fee and any short payment. You get what is left after your customer pays.

### Does this include recourse risk?

No. In a recourse deal, an unpaid invoice can come back to you. In a non-recourse deal, the factor takes that loss. Ask exactly which events the non-recourse promise covers.

### Is a line of credit a better fit?

It depends on what you need. A line charges interest only on what you draw. A factor also collects the invoice. [The SBA Express line of credit calculator](https://www.sbaexpress.loans/sba-express-line-of-credit-calculator/) shows how an SBA line is built.

## Put this calculator on your site

Paste this code into any page. It shows the calculator in a frame with no site header. Replace YOUR-NAME with a short name for your organization. The name travels with any visitor who moves to the next step. The height fits a laptop column. On a phone the frame scrolls inside itself, so raise the height if your page is narrow.

```
<iframe src="https://www.sbaexpress.loans/embed/invoice-factoring-cost/?partner=YOUR-NAME" title="Invoice factoring cost calculator" width="100%" height="1000" style="border:0" loading="lazy" allow="clipboard-write"></iframe>
<p><a href="https://www.sbaexpress.loans/tools/invoice-factoring-cost/">Invoice factoring cost calculator</a> from SBA Express Loans</p>
```

## Sources

- [Regulation Z, Appendix J, annual percentage rate computations (read November 9, 2026)](https://www.consumerfinance.gov/rules-policy/regulations/1026/j/)
- [Cal. Code Regs. tit. 10, § 941, assumptions for factoring transactions](https://www.law.cornell.edu/regulations/california/10-CCR-941)
- [N.Y. Comp. Codes R. & Regs. tit. 23, § 600.13, assumptions for factoring transactions](https://www.law.cornell.edu/regulations/new-york/23-NYCRR-600.13)
- [SOP 50 10 8.1, App. 14, Para. A.2](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [13 CFR 120.214, variable interest rates](https://www.ecfr.gov/current/title-13/section-120.214)
- [WSJ Prime Rate, Federal Reserve series DPRIME via FRED](https://fred.stlouisfed.org/series/DPRIME)