MCA factor rate to APR converter

Work out your APR

Enter the offer you have been quoted. The calculator builds the collection schedule and solves for the annual rate that makes those collections worth exactly what you received.

Total repayment

£65,000

Total cost

£15,000

Collections

365 of £178

APR

73.0%

Illustrative. Your provider's contract sets the real cost; a percentage holdback means your card takings set the real term.

How the APR is calculated

You need:

• Advance, e.g. £50,000, and any upfront fee taken from it.
• Factor rate, e.g. 1.30. Use the factor rate in your written offer; none of the providers we review publishes a standard range.
• Expected repayment term in months, e.g. 12.
• Collection pattern: every day, weekdays only, or weekly.

Step 1: total repayment equals advance multiplied by factor. £50,000 x 1.30 = £65,000, a cost of £15,000.

Step 2: split the repayment into equal collections. Daily over 12 months that is 365 collections of £178.

Step 3: find the annual rate at which the value of every collection, discounted back to the day you received the money (time counted in years of 365 days), equals the cash you received. That rate is the APR: 73.0% for this example (72.8% if collected on weekdays only).

This is the same equation UK consumer-credit APRs use (FCA CONC App 1.2), rounded to one decimal place. MCAs are commercial finance and don't have to quote an APR, so treat this as a comparison figure, not a disclosure.

Assumptions behind every figure on this page

• The advance is paid in full on day 0, less any upfront fee you enter.
• The total repayment is collected in equal amounts over the term you enter, starting the day after payout.
• The term is an estimate. With a percentage holdback, stronger card takings shorten it and raise the APR; weaker takings lengthen it and lower the APR. The pound cost doesn't change.
• No other charges (for example default or early-settlement terms) are included.

An earlier version of this page used a "divide by half the term" shortcut, which understated the APR, badly for short terms. Every figure below now comes from the full calculation.

Worked example 1: factor 1.20 across 6, 9 and 12 months

Advance £50,000, factor 1.20, total repayment £60,000, total cost £10,000.

The same factor gives very different APRs depending on how fast you pay it back: repaying in 6 months more than doubles the APR of a 12-month repayment. Providers quote a single factor; the holdback percentage and your card flow set the actual term.

Worked example 2: factor 1.30 across 6, 9 and 12 months

Advance £50,000, factor 1.30, total repayment £65,000, total cost £15,000. This is the central case for a typical UK SMB MCA quote.

Repaying this advance in 9 months or less puts the same product into triple-digit APRs, which is common for hospitality and e-commerce businesses with high card volume.

Worked example 3: factor 1.40 across 6, 9 and 12 months

Advance £50,000, factor 1.40, total repayment £70,000, total cost £20,000. This factor band is typical for higher-risk profiles: thin trading time, recent CCJs, single-channel sector concentration, or a top-up advance over an existing MCA.

At factor 1.40 repaid in 6 months, the APR is 312.9%. That can still be the right product if it unblocks a contract that pays back inside the same window, but it isn't a loan-equivalent product and shouldn't be compared with one on monthly cost alone.

### Worked examples: factor rate to APR on a £50,000 advance, daily collections

| Factor rate | Total repayment | Total cost | APR at 6 months | APR at 9 months | APR at 12 months |
| --- | --- | --- | --- | --- | --- |
| 1.20 | £60,000 | £10,000 | 111.0% | 64.8% | 45.5% |
| 1.30 | £65,000 | £15,000 | 197.5% | 107.4% | 73.0% |
| 1.40 | £70,000 | £20,000 | 312.9% | 158.3% | 104.1% |

Source: FundBiz MCA APR calculation (src/lib/mca-apr.ts)

APR = the annual rate at which equal daily collections over the term, discounted with time in years of 365 days, equal the £50,000 received (FCA CONC App 1.2 equation), rounded to one decimal place. Terms of 6, 9 and 12 months = 183, 274 and 365 daily collections. No fees. MCAs are commercial finance and need not quote an APR; this is a comparison figure.

When this number matters

The APR conversion matters when:

• You're choosing between an MCA and a term loan or asset finance facility for the same use of funds.
• You want to budget the true monthly cost into a 12-month forecast.
• A lender or broker has quoted only the factor and you want to sanity-check the deal.
• You're renewing or topping up an MCA and need to compare cumulative cost across rolling advances.

It matters less when the use of funds is a one-off, fast-turn opportunity (a stock buy, a bridging gap before a confirmed receivable) where the question is "will this trade pay it back?" rather than "what is the annualised cost?"

Edge cases

Daily holdback faster than expected. If card receipts come in stronger than the lender's underwriting assumption, the MCA pays off faster, which raises the effective APR (you pay the same total cost over fewer days). Strong trading paradoxically makes the MCA more expensive on an annualised basis.

Holdback slower than expected. A weak season slows repayment, which lowers APR. The total cost in pounds doesn't change. Slower payback is cheaper on APR but ties up working capital longer.

Top-up MCAs. Some lenders refinance an existing MCA into a larger one. The APR on the new advance is calculated on the new principal but the timing reset means cumulative cost across both products is usually higher than the headline factor implies.

Fixed daily debit instead of holdback. Some products use a fixed daily £ debit rather than a percentage of card receipts. The term is then known up front, so the APR from the calculator above is exact for that schedule.

FAQs