How We Calculate Funding Costs

Every comparison on this site reduces to two numbers. First, total dollar cost: everything you repay minus what you received. Second, the APR-equivalent: the annualized rate that would produce the same dollar cost over the same window. Those two numbers make a factor rate, a flat fee, and an interest rate directly comparable.

The method matters because funding quotes are not stated in the same units. A merchant cash advance quotes a factor rate. A term loan quotes an APR. A credit-to-cash service quotes a flat fee. None of these answers the only question that matters at signing: how many dollars leave your account, by when. Our guides answer that question first and translate marketing language second.

The base scenario: $15,000 over six months

Cost tables use a $15,000 funding need. The window is six months unless a page states otherwise. Credit-to-cash conversions are modeled differently. The fee applies to the draw, not to a scheduled repayment, so we model a single 30-day utilization. Where a provider prices by tier, we use the tier that matches the base scenario. The page says so.

Assumptions behind the cost model

• Simple annualization. APR-equivalent is computed as cost divided by amount, divided by the window fraction of a year. No compounding.
• No fees beyond the headline. Origination charges, processing fees, and prepayment penalties are included only where a provider documents them. Undocumented fees are listed as unknown rather than guessed.
• Repayment cadence is taken from the product. Daily ACH for advances, monthly installments for loans, card-cycle settlement for credit-to-cash.

Sources behind every figure

Figures trace to provider disclosures and published rate sheets, the SBA business funding guide, the CFPB complaint database, FTC enforcement records, and NAR research for earnest money practice. When one source carries a central number, the page links to it. A figure that cannot be verified is never dressed up as documented. Those get marked as approximations instead.

What the method cannot do

Approximations are not quotes. Your cost depends on underwriting: revenue stability, credit profile, time in business, and the provider’s current book. A 55-65% APR-equivalent range for a factor-1.3 advance describes the product class, not the offer on your desk. Price your own offer with the same two numbers before you sign anything.

Update cadence and corrections

Funding terms move. Pages carry a modification date, and provider figures are re-checked on a rolling basis against the sources above. When terms change, the page gets a new date rather than a silent edit. If a figure ever disagrees with a provider’s own disclosure, the page is corrected as soon as the mismatch is verified. Our funding relationship rules are in the affiliate disclosure, and the person behind the numbers is in About the Author.