# Merchant cash advance true cost calculator

**Short answer:** A $50,000 advance at a 1.30 factor, repaid every business day for 6 months, costs $15,000 and works out to 109.3% APR. A factor rate is not an APR. The method follows Regulation Z, Appendix J.

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

## How this is computed

Payback is the advance times the factor. Each payment is the payback divided by the number of payments. We count business-day payments at 21 a month and 252 a year. Weekly payments use 52 a year, and payments every two weeks use 26.

The APR is the yearly rate that makes those payments worth the cash you received. We find the rate per payment, then multiply by the payments in a year:

```
cash received = payment x (1 - (1 + i)^-n) / i
APR = i x payments per year
```

That is the actuarial method in [Regulation Z, Appendix J](https://www.consumerfinance.gov/rules-policy/regulations/1026/j/), paragraph (b)(1). Fees taken out of the advance reduce the cash you received, so they raise the APR.

Business-day payments are spaced evenly here. Real calendars have weekends and bank holidays, so a specific start date can move the APR a few points either way.

Federal Truth in Lending rules do not cover credit for a business purpose ([12 CFR 1026.3(a)](https://www.consumerfinance.gov/rules-policy/regulations/1026/3/)). California and New York do require an APR on covered offers, figured under Appendix J ([Cal. Code Regs. tit. 10, § 940](https://www.law.cornell.edu/regulations/california/10-CCR-940); [N.Y. Comp. Codes R. & Regs. tit. 23, § 600.3](https://www.law.cornell.edu/regulations/new-york/23-NYCRR-600.3)).

## A worked example

Take a $50,000 advance at a 1.30 factor, repaid every business day for 6 months. These figures are an illustration, not a quote.

The cost is $15,000 whether you repay in 6 months or 12. The factor stays the same, so the APR moves with the term. A faster payoff means you hold the money for less time.

A 1.30 factor is not a 30% rate. The balance falls with every debit, so the same dollars buy far less time with the money.

At SBA's maximum rate for $50,000, 13.50% today, the same money over the same 6 months would cost $1,987 in interest. That maximum is a ceiling on variable rates, not an offer. A lender decides whether to lend and at what rate.

**$50,000 at a 1.30 factor over 6 months**

| Item | Amount |
| --- | --- |
| Total you repay | $65,000 |
| Cost of the advance | $15,000 |
| Number of payments | 126 |
| Each business-day payment | $515.87 |
| Cash out per month | $10,833 |
| APR | 109.3% |

SBA's rule on paying off an advance

A merchant cash advance is eligible for refinancing only if the agreement has been converted to a term loan, has amortized for at least 24 months and no new agreements followed; an active agreement is not eligible (SOP 50 10 8.1, App. 14, Para. A.3). [Read the full rule](https://www.sbaexpress.loans/answers/can-sba-loan-pay-off-merchant-cash-advance/).

## Common questions

### Is a factor rate the same as an interest rate?

No. A 1.30 factor means you repay $1.30 for every $1 advanced, however long it takes. An interest rate charges for time. That is why the same factor gives a different APR at every term.

### Why does a faster payoff raise the APR?

The dollar cost stays the same, but you hold the money for less time. In this example, paying in 4 months instead of 6 raises the APR from 109.3% to 163.4%.

### Does paying an advance off early save money?

Only if the contract says so. With a fixed factor, the payback amount is set on the day you sign. Ask for any early-payoff discount in writing.

### What if my sales slow down?

Read the reconciliation clause in your agreement. It says whether the payment adjusts when sales fall, and how. A slower payoff lowers the APR, but it does not lower the payback.

## 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/mca-true-cost/?partner=YOUR-NAME" title="Merchant cash advance true cost calculator" width="100%" height="1000" style="border:0" loading="lazy" allow="clipboard-write"></iframe>
<p><a href="https://www.sbaexpress.loans/tools/mca-true-cost/">Merchant cash advance true 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/)
- [12 CFR 1026.3, exempt transactions](https://www.consumerfinance.gov/rules-policy/regulations/1026/3/)
- [Cal. Code Regs. tit. 10, § 940, calculation of annual percentage rate](https://www.law.cornell.edu/regulations/california/10-CCR-940)
- [N.Y. Comp. Codes R. & Regs. tit. 23, § 600.3, annual percentage rate disclosure](https://www.law.cornell.edu/regulations/new-york/23-NYCRR-600.3)
- [SOP 50 10 8.1, App. 14, Para. A.3](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)