Business funding
How to Compare Business Funding Offers on Total Cost
Compare loans, lines of credit and merchant cash advances by what you repay in total, how often you pay, and what happens if you pay early, not by the headline rate.
Why the headline rate can mislead
Business funding is priced in different ways. A term loan may quote an interest rate; a merchant cash advance usually quotes a factor rate, such as 1.3, meaning you repay 1.3 times the amount advanced. A factor rate is not an interest rate, and on a short term it can mean a much higher annual cost than it looks.
Worked example (made-up round numbers): a $20,000 advance at a factor rate of 1.3 means $26,000 repaid, a cost of $6,000. If it is repaid over six months, that cost is spread over half a year, not twelve.
Some states, including California and New York, now require providers of certain commercial financing to give cost disclosures, which can include an estimated annual rate. Ask for one in writing either way.
The five lines to compare
| Line | What to ask |
|---|---|
| Money you receive | "After all fees, how much reaches my account?" |
| Total repaid | "What is the total I will repay, every fee included?" |
| Payment | "How much, and is it daily, weekly or monthly?" |
| Term | "How long until it is paid off?" |
| Paying early | "If I pay early, do I save anything, or is there a penalty?" |
Free funding check
Tell celerfunding.com what the money is for. We will say which types of business funding may fit and what to fix first. We are not a lender and never charge you a fee.
Fees to look for
- Origination or underwriting fees taken off the top.
- Broker fees (celerfunding.com never charges you one).
- Late or returned-payment fees.
- Fees for renewing or "refinancing" before the first one is paid off.
Check the payment fits your cash flow
Daily or weekly payments come out even in slow weeks. Take your slowest month of the past year and check the payment still fits. If it only works in a good month, the amount or product is wrong.
Before you sign
- Every offer in writing on the same five lines
- Payment tested against your slowest month
- Personal guarantee and collateral terms read
- Full agreement read; questions sent to an accountant or lawyer
- Lender's identity checked (name, address, licence where required)
If someone asks for an upfront fee to "guarantee" approval, walk away.
Go deeper
Already past the basics? celerfunding.com's guide to reading a business loan offer goes line by line through the fine print: fees, prepayment, personal guarantees, liens and default.
Frequently asked questions
What is a factor rate?
A multiplier used mainly for merchant cash advances. A 1.3 factor on $10,000 means $13,000 repaid. It does not account for how short the term is, so compare total cost and term.
Is a merchant cash advance a loan?
Usually it is structured as a purchase of future sales rather than a loan, which changes how it is regulated and priced. Read the agreement carefully.
Should I take the biggest amount I am offered?
Not by default. Borrow what the purpose needs and your cash flow can repay, even in a slow month.
celerfunding.com is not a lender and does not make credit decisions. We refer businesses to independent third-party lenders and funding companies, which may pay us a referral fee. We never charge you a fee. All financing is subject to the lender's own approval, terms and pricing. Business (commercial) financing only. General information, not financial, tax or legal advice.