What Does a Working Capital Loan Really Cost? Factor Rates, APR, Fees and Payback
The two questions every owner asks first: how much can I get, and what will it cost? Here's how working capital is sized and priced, and how to compare offers on equal terms.
How Much Can I Borrow?
Short-term working capital is sized mostly off your average monthly deposits. A common starting point is roughly 50%–150% of one month's revenue for short terms, with larger amounts on longer terms for stronger files. Our programs run $10,000 to $5,000,000 with terms from 6 months to 10 years. Existing daily or weekly payments reduce what you qualify for, because the lender looks at what your cash flow can carry.
Factor Rate vs. APR
Many short-term products are quoted as a factor rate, such as 1.20. Multiply it by the amount funded to get total payback: $100,000 × 1.20 = $120,000. That $20,000 cost is fixed, no matter how fast you repay (unless there's an early payoff discount).
A factor rate is not an interest rate. On a 6-month term, a 1.20 factor works out to a much higher annualized cost than "20%" suggests. Longer-term loans to established businesses are usually quoted as an interest rate and price closer to bank debt. Compare offers by total payback and term, not the headline number.
Typical Pricing Ranges
- Short-term revenue-based (3–18 months): factor rates often around 1.15–1.45
- Longer-term working capital (2–10 years): interest-rate pricing that depends on credit, time in business, and cash flow
- SBA working capital: lowest pricing, slowest process — see SBA working capital loans
Fees to Ask About
- Origination or underwriting fee, and whether it's taken out of the funded amount
- Payment frequency (daily, weekly, monthly) and the exact payment
- Early payoff: is there a discount, or is the full factor owed regardless?
- Late, returned-payment, or default fees
What Is Your Fee, and Who Pays It?
On working capital and lines of credit, California Business Capital is paid by the capital provider, and only when your financing funds. There's no separate fee billed to you. Any lender origination fee is the lender's own charge and appears in your offer and agreement.
How to Compare Two Offers
- Write down the net amount you actually receive after fees.
- Write down total payback and the number of months.
- Check the payment against a slow month, not an average one.
- Ask what an early payoff would save.
See program details on our working capital loans page, or check what you qualify for.
Ranges reflect typical market practice, not quotes. Rates, amounts, and terms vary by capital provider and business, and every offer is subject to underwriting and approval.
Related reading: Working Capital Loans in California · What Working Capital Really Costs · How a Business Line of Credit Works · Renewals, Stacking & Consolidation
California Business Capital | Fresno, California | info@cabizfunding.com | 559-549-4717