Merchant cash advance rates, in dollars and per year (2026)

A merchant cash advance is a purchase of a business's future receipts: a funding company pays a lump sum now and collects a fixed total from the business's deposits. Its price is a factor rate, a decimal multiplied once by the amount funded. At a 1.30 factor rate, $50,000 of funding is paid back as $65,000. The $15,000 difference is the cost, and it is fixed in dollars the day the contract is signed.

A factor rate is not an annual rate. Collected in 26 equal weekly payments, that $15,000 works out to about 107% a year. Collected in 52, it works out to about 54% a year. The dollars are the same. The time the business has the money is not. A fee taken out of the funding pushes either figure higher.

Little of this is published before a business applies. The Clearwater Published Requirements Check (November 2026) found that 5 of 9 national funding companies publish no factor rate range, starting rate or APR on their own websites. This page found no official source that states an average factor rate, so it does not give one. It gives the arithmetic instead: a table of factor rates against repayment lengths, a converter, the fees to look for, and the states whose disclosure laws put an annual rate in writing.

$15,000

is the cost of $50,000 at a 1.30 factor rate, fixed at signing. Collected in 26 equal weekly payments it works out to about 107% a year, and in 52 to about 54%. Arithmetic on a stated example, not a market rate.

5 of 9

national funding companies publish no factor rate range, starting rate or APR on their own websites. Clearwater Published Requirements Check, read November 10, 2026.

3 of 12

state disclosure laws that reach merchant cash advances require an annual rate on the disclosure: California, New York and Vermont (Vermont from July 2027). Statutes linked below.

A factor rate is a decimal, such as 1.30, that is multiplied once by the amount funded to set the payback amount: the total a business owes on a merchant cash advance. It prices the advance in dollars at signing. It is not an interest rate, and it is not an annual rate.

A 2019 Federal Reserve Board report on online lender websites describes a factor rate as a rate used to calculate a fee, often expressed as a percentage of the amount provided and typically shown in decimal form. The report's own example of an advance is $50,000 in capital provided in exchange for $65,000 in future receipts, which amounts to a factor rate of 1.30.

What does a 1.30 factor rate cost in dollars?

Multiply the amount funded by the factor rate to get the payback amount, then subtract the funding to get the cost. A 1.30 factor rate on $50,000 is a payback of $65,000 and a cost of $15,000. The digits after the decimal point are the cost in cents for each dollar funded: 1.30 is 30 cents on the dollar.

Arithmetic on $50,000, a round amount chosen for illustration. 1.05 and 1.44 are the two ends of the factor rate range Clearwater Capital Group publishes. No row is an offer or a typical deal.

What a factor rate is not

• Not an interest rate. Nothing accrues. The cost set by the factor rate does not grow if repayment takes longer than planned. Unless the contract gives a discount for paying early, it does not fall if repayment is quicker either.
• Not an annual rate. A 1.30 factor rate does not mean 30% a year. The same dollars collected over fewer weeks are a higher annual figure, as the next section shows.
• Not a rate on what is still owed. Interest on a loan is charged on the remaining balance, so the charge falls as the balance is paid down. A factor rate is applied to the full amount on day one.
• Not the whole cost. Fees can be taken out of the funding or charged while the advance is open. None of them is inside the factor rate.

Owners can find the difference hard to judge. In focus groups described in the same Federal Reserve Board report, business owners were shown a $50,000 advance with a 1.20 factor rate and a $60,000 total repayment, and were asked to guess the interest rate if it were repaid in one year. Their guesses ran from 10 percent to over 50 percent. A footnote in the report puts the effective rate, assuming daily payments and steady sales, on the order of 40 percent. The report notes that focus groups gather insights and do not measure how common a view is.

It depends on how long repayment takes. A 1.30 factor rate repaid in 26 equal weekly payments works out to about 107% a year. The same factor rate repaid in 52 weekly payments works out to about 54% a year. The cost in dollars is identical in both cases. The annual rate equivalent measures that cost against the time the business has the use of the money.

An annual rate equivalent answers one question: if a loan had these exact payments, what yearly rate would it carry? It is found by solving for the rate per payment period at which the payments are worth exactly the money received, then multiplying by the number of payment periods in a year. At every length in the table below it comes out above the cents on the dollar, because the funding starts going back with the first payment. Averaged over the life of the advance, the business holds roughly half of what it was funded.

Each cell is the annual rate equivalent, in percent a year, of that factor rate repaid over that many weeks. The assumptions:

• $50,000 is funded and all of it reaches the account. No fee is taken out and none is added.
• The payback amount is collected in equal weekly payments, one a week, with none missed and none changed.
• The weekly rate is multiplied by 52 and is not compounded. Each figure is rounded to a whole percent.
• The percentages are the same for any amount funded. $50,000 only fixes the example.

This table is arithmetic. It is not an offer, a quote, or a statement of what advances cost in the market. The 1.05 and 1.44 rows are the two ends of the range Clearwater Capital Group publishes, and the columns run from about 3 to 18 months, the span the Federal Reserve Board report gives for how long advances generally take to repay. Clearwater publishes a factor range, not which lengths go with which rates; no cell is a Clearwater rate.

How to read the table

Read across a row to see what time does. At 1.30, going from 13 weeks to 78 weeks takes the figure from about 207% to about 36% a year without changing the $15,000 cost. Read down a column to see what the factor rate does. At 52 weeks, 1.10 works out to about 19% a year and 1.40 to about 70% a year.

How often payments are collected matters a little too. A 1.30 factor rate repaid over 26 weeks works out to about 109% a year in 126 business-day payments, about 107% in 26 weekly payments, and about 97% in 6 monthly payments. The sooner the money starts going back, the higher the figure.

The converter opens on example values: a 1.30 factor rate, 52 weekly payments and a 2% fee taken out of the funding. Those values cost 30 cents per dollar funded and 32.7 cents per dollar received, and work out to about 59% a year. With no fee, the same advance works out to about 54% a year.

Fees come in three kinds, and none of them is inside the factor rate. Some are taken out of the funding before it reaches the account. Some are charged on a schedule while the advance is open. Some are charged only if something happens, such as a returned payment. A fee taken out of the funding raises the cost of every dollar received, because the payback amount is still figured on the full amount funded.

• Taken out of the funding. It goes by names such as origination, set-up, underwriting or administrative fee. The business receives less than the amount the factor rate is applied to.
• Charged on a schedule. A monthly administrative or maintenance fee, collected for as long as the advance is open. It adds to what is paid back.
• Charged if something happens. Late payment and returned payment fees. They cost nothing if nothing goes wrong, and they are outside every figure on this page.

The Federal Reserve Board report found that, in some cases, footnotes and fine print on online lender websites described fees, across loans, lines of credit and advances. They were most often for origination, along with administrative fees, account maintenance fees on credit lines and fees charged by partners. They were shown as a range, as a flat monthly or one-time charge, or as a charge up to a set percentage, and some sites described no fees at all. One site in that review listed a 2.5% set-up fee and an administrative fee of up to $50 a month next to a factor rate.

State disclosure laws separate the kinds. New York's, for example, requires the provider to state the disbursement amount after any fees deducted or withheld at disbursement, and separately to describe all other potential fees not included in the finance charge, including draw fees, late payment fees and returned payment fees (Financial Services Law section 803, items (a) and (g)).

What a fee taken out of the funding does to the figure

The payback amount stays at $65,000. What changes is the money that arrives, and with it the cost per dollar received and the annual rate equivalent.

Assumptions: $50,000 funded at a 1.30 factor rate, the $65,000 payback collected in equal weekly payments, and the fee withheld from the funding. A fee added to the payback or charged monthly raises what is paid back and is not shown. Arithmetic on round numbers, not an offer and not a typical fee.

A $1,000 fee is 2% of $50,000. Over 52 weekly payments it moves the annual rate equivalent from about 54% to about 59% a year, because the business pays back the same $65,000 and had the use of $49,000.

Four questions settle the fees on any offer:

1. Is anything taken out of the funding, and what amount reaches the account?
2. Is anything charged on a schedule while the advance is open?
3. What is charged if a payment is late or returned?
4. Is a broker being paid, by whom, and is any of it charged to the business?

Clearwater Capital Group, the broker that publishes this page, charges nothing before funding and is paid out of the funded deal.

Most publish no rate or range a business could price an advance with. The Clearwater Published Requirements Check (November 2026) found that 5 of 9 national funding companies publish no factor rate range, starting rate or APR on their own websites. The count was made on November 10, 2026 from each company's own website.

Clearwater Published Requirements Check, read November 10, 2026. The last two rows, a worked example only and nothing about price, are the 5 counted as publishing no factor rate range, starting rate or APR. Of the 4 that publish a figure, 2 list only loans and lines of credit as their products, so the figure they publish is not the price of an advance. These are counts: this site names none of the companies. The rest of the research is on Clearwater's statistics page.

Clearwater Capital Group, which publishes this page, is a broker and does publish a range: the factor rates it quotes run from 1.05 to 1.44. A published range is not an offer. Where a business lands inside it is settled file by file, on its deposits, balances, open advances, time in business and credit.

A Federal Reserve review found much the same in 2019. For the Federal Reserve Board report, researchers read the websites of 10 online lenders as of August 2019. Of the 10, 4 gave no rates or costs for any product, and the report found that descriptions of merchant cash advances included little or no information about actual costs and repayment terms. The report cautions that its 10 websites should not be considered representative of the whole industry.

For a business owner the result is simple. The only factor rate that counts is the one on a written offer, next to the payback amount, the payments and the fees.

No government or Federal Reserve source that this page found states an average factor rate. What the Federal Reserve has put in print is narrower. A 2019 Board report says the annual rate equivalent of a merchant cash advance may exceed 80% or reach triple digits, depending on how soon it is repaid. The Federal Reserve's 2025 Small Business Credit Survey found that 60% of firms that borrowed from online lenders said their costs were higher than expected.

Figures as recorded in Clearwater's statistics research, read in the linked documents on November 10, 2026. The survey reports cost and satisfaction by type of lender, not by product. Online lenders include, but are not limited to, merchant cash advance companies.

By this page's arithmetic, not the report's, the report's example of $50,000 for $65,000 works out to about 54% a year if it is collected in 52 equal weekly payments, about 72% in 39 and about 107% in 26.

California's regulator now collects disclosed APRs. Its Department of Financial Protection and Innovation requires covered commercial financing providers to file an annual report, first due March 15, 2025. The form asks providers that gave APR disclosures for the lowest, highest, average and median APR they disclosed on sales-based financing, by size of transaction. Sales-based financing is the legal category for financing repaid as a percentage of sales. As of November 12, 2026, this page found no published summary of those reports.

California, New York and Vermont do, Vermont from July 2027. As of November 2026, at least 12 states have enacted commercial financing disclosure laws that reach merchant cash advances, and 3 of them require an annual rate to be disclosed. The other 9 do not.

From Clearwater's statistics research, as of November 2026. Each row links the statute or act it was read in. The count is a floor: a state not found would raise it.

What the 3 laws require, in their own terms

• New York. A provider of sales-based financing must disclose the estimated annual percentage rate, using the words annual percentage rate or the abbreviation APR, expressed as a yearly rate, inclusive of any fees and finance charges, and calculated in accordance with federal Regulation Z, 12 CFR 1026.22 (Financial Services Law section 803(c)).
• California. The state's law requires the total cost of the financing expressed as an annualized rate, and a 2023 law, SB 33, deleted the date on which that requirement would have ended, as the state's Department of Financial Protection and Innovation summarizes it. Under the regulation the department adopted in 2022, the second row of a sales-based financing disclosure is the Estimated Annual Percentage Rate (APR), calculated under Appendix J of 12 CFR Part 1026 (sections 914 and 940). Where no part of the charge is based on an interest rate, the same row must say that APR is not an interest rate.
• Vermont. Act 142 of 2026 adds 8 V.S.A. section 2247. Its subsection (g)(1)(C) requires the estimated annual percentage rate, in the same terms as New York's law, determined in accordance with Regulation Z. Its commercial financing sections apply to contracts entered into, modified, amended or restructured on or after July 1, 2027.

All three call the figure an estimate, because the term of an advance repaid as a share of sales has to be projected. The New York and Vermont laws tell the provider to project the business's sales in order to estimate how long repayment will take, and California's required wording tells the business that the rate may vary with its actual income.

The other 9 laws do not require an annual rate. Florida's disclosure, for example, lists six items that include the total dollar cost and no annual rate (section 559.9613(2)), and Texas's lists the finance charge and the total repayment amount (Finance Code section 398.051(a)).

Federal Regulation Z, the rule that puts an annual percentage rate on consumer credit, exempts credit extended primarily for a business, commercial or agricultural purpose (12 CFR 1026.3(a)). The annual rate requirements described here come from state law, and each state's law has its own size limits and exemptions. This section reports what the texts say and is not legal advice.

Put both offers on the same lines: the money that reaches the account, the payback amount, the number and size of the payments, and the annual rate equivalent those three produce. The factor rate alone cannot rank two offers. A lower factor rate over fewer weeks, or with a larger fee taken out, can cost more per dollar per year.

An illustration with round numbers. Neither column is an offer, a quote or a typical deal, and the factor rates, lengths and fee are placeholders.

Offer A has the lower factor rate and a cost of $11,000 against $15,000 for Offer B. Offer B works out to about half the annual rate equivalent, spreads repayment over 32 more weeks, and takes $1,250 a week where Offer A takes $3,000. Which is better depends on what the money is for and what the business can carry each week. The factor rate alone would have told you none of that.

Before you sign, have these in writing for every offer:

1. The net funding. What reaches the account after fees and after any existing balance is paid off.
2. The payback amount. One total, in dollars.
3. The payments. How much, how often and how many. If payments are a percentage of sales, the percentage and the estimate of how long repayment will take.
4. The annual rate equivalent. Divide the payback amount by the amount funded to get the factor rate, enter any fee as a percent of the amount funded, and put both through the converter with the number and frequency of payments. Money used to pay off an existing balance is not a fee. In California and New York, a disclosure the law covers already carries an estimate.
5. Early payoff. Whether the contract discounts the payback if you pay early, and by how much. Without a discount, paying early leaves the dollars unchanged.
6. What happens if sales drop. Whether payments adjust to actual receipts, and which clause says so.
7. Every other fee. Scheduled fees, and fees for a late or returned payment.

Clearwater's guide on how to read an advance contract shows where each of these sits in the paperwork.

• Publisher. Clearwater Capital Group, a business funding broker and the trade name of Clearwater Capital Solutions LLC. It takes funding applications on this site, is paid when a business it helps is funded, and publishes its own factor rate range, 1.05 to 1.44, which appears in the tables as two of the rows.
• The tables and the converter. Arithmetic on stated round numbers, computed in code when the page is built and recomputed by a test. They assume equal payments. They are illustrations, not offers, quotes or typical deals, and no figure in them is a market rate.
• The annual rate method. The rate per payment period at which the payments are worth exactly the money received, multiplied by the payment periods in a year and not compounded. It is the method of Clearwater's own calculators. Federal Regulation Z builds an annual percentage rate the same way, as the unit-period rate multiplied by the number of unit-periods in a year (Appendix J to 12 CFR Part 1026; 12 CFR 1026.22). For weekly payments both count 52. For business-day payments the converter counts 252 payment days a year, where Appendix J counts 365 for a daily unit-period, so that setting is not a Regulation Z figure. Nothing here is a disclosure under any state's law.
• A check against a published illustration. The Federal Reserve Board report's table 3 puts a 1.15 factor rate on $50,000, with a total repayment of $59,000 over 6 months of daily payments, at approximately 70% APR. The method used here, given $50,000 received and $59,000 repaid in 126 equal business-day payments, returns about 68%. For the report's focus-group sample, which a footnote puts on the order of 40 percent, it returns about 38%. The report does not print its formula, so these are rough checks, not reproductions.
• What funding companies publish. The Clearwater Published Requirements Check: 9 national funding companies, each read on its own website on November 10, 2026. This page reports counts and names no company.
• Federal Reserve figures. Taken from Clearwater's statistics research, which read them in the linked documents on November 10, 2026. The Board report was opened again on November 12, 2026 for the passages listed below.
• State laws. The table is Clearwater's research as of November 2026, each row read in the linked statute or act. On November 12, 2026 the New York section, the Vermont act, California's regulation and its regulator's summary of the 2023 amendment, the Florida and Texas disclosure lists and three Regulation Z passages were opened and read for this page. California's statute itself was not opened that day. This page explains what those texts say. It is not legal, tax or financial advice.
• What this page cannot tell you. What any business will be offered, what advances cost on average, or what a contract with payments tied to sales will work out to once real sales are known. Only a written offer answers the first, and no public source this page found answers the second.
• Corrections. Write to efras@clearwatercapitalgrp.com.