Factor rates are unique to Merchant Cash Advances and often confuse first-time applicants. As a direct MCA lender, Solvic Capital explains exactly how they work.
What Is a Factor Rate?
A factor rate is a decimal multiplier applied to your advance amount to determine total repayment. Unlike interest rates that compound over time, factor rates are fixed and applied once upfront.
How to Calculate Your Total Cost
Simply multiply your advance amount by the factor rate. Example: $40,000 advance at 1.25 factor rate = $50,000 total repayment. The $10,000 difference is your cost of capital.
What Factor Rates Does Solvic Capital Offer?
Solvic Capital's direct factor rates range from 1.10 to 1.50. Where your specific offer falls depends on your industry, monthly revenue, time in business, and bank statement strength.
Why Direct Factor Rates Are Lower
When you get an MCA through a broker, the broker typically adds 0.05 to 0.20 to the lender's base factor rate as their commission. Applying directly with Solvic Capital eliminates this markup entirely.
Factor Rate vs APR
Because MCAs don't have a fixed repayment term, converting factor rates to APR can produce misleading figures. The most useful metric is total cost in dollars — which Solvic Capital always discloses upfront.