What it costs
Nobody explains factor rates. So here.
Revenue-based funding isn't priced with an interest rate. It's priced with a factor rate — a multiplier applied once to the amount you receive. That one difference changes almost everything about how you should think about the cost.
Move the sliders and watch what actually changes
Hypothetical figures, so you can see the shape of the arithmetic rather than take a number away from it.
Sometimes called the purchase price or advance amount.
$50,000Typically somewhere between 1.10 and 1.50. Stronger revenue and cleaner history push it down.
1.30Revenue-based funding has no fixed maturity date — remittances follow your sales, so the real period moves.
9 monthsRead this before you use the number. Every figure here is an educational illustration, not an offer, a quote, or a prediction. The 1.30 it opens on is a midpoint, not a rate anyone has been given. Drag the period slider and watch what the weekly figure does while the total stays still — that is the whole lesson of this page in one movement.
A factor rate is not an interest rate
Interest accrues. It is calculated against what is still outstanding, over time, so paying something off sooner means paying less of it. Almost everyone arrives with that model in their head, because almost every other financial product works that way.
A factor rate does not accrue. It is applied once, at the start, to the amount you receive. At 1.30, receiving $50,000 means delivering $65,000 in total — and that $65,000 is fixed on the day you sign. It does not grow if the period stretches, and it does not shrink if the period contracts.
So the honest way to read a factor rate is as a price, not a rate. You are buying a sum of money today for a larger sum of money delivered out of future sales. The number after the decimal point is the whole cost, stated up front.
Which means finishing faster does not make it cheaper
This is the part that catches people, and it is worth being blunt about because it runs opposite to every instinct built on credit products.
If the total is fixed and you deliver it in six months instead of twelve, you have paid the same money in half the time. In cash-flow terms that is not a saving — it is the same cost, compressed. Expressed as an effective annualised figure, a shorter period makes the number look worse, not better.
Drag the period slider above and watch the weekly figure rather than the total. The total will not move. That is the point, and it is the number that will actually be leaving your account.
What moves the number
The factor rate a funding partner offers is a judgement about how confident they are of being delivered. Consistent deposits, a longer trading history, a clean business bank account and few or no open positions all push toward the lower end of a partner's range. The opposite pushes the other way.
Industry matters too, but less than people expect, and usually as a proxy for how predictable revenue is rather than as an opinion about the trade itself.
What does not move it is how well you negotiate. This is priced off a file, not a conversation. The useful work happens before submission — getting statements clean and complete — not in arguing about a number after.
What else can cost you money
The factor rate is not always the whole picture, and a page about cost that only discussed the factor rate would be doing the same thing it is criticising.
Ask any partner directly about origination or administrative fees, what happens if a scheduled delivery fails, and whether there is any adjustment for finishing early. Ask whether there is a reconciliation, and how it works when sales come in below what was assumed. None of those are unusual and none of them are hidden — but they are only disclosed reliably if someone asks, and it should be you or us, before you sign.
Everything a partner intends to charge appears in the agreement in writing before you commit to anything. If a number is being described to you out loud and is not in the document, that is worth stopping over.
Questions about the cost
What's a typical factor rate?
Commonly quoted ranges sit somewhere between 1.10 and 1.50, and the calculator opens at 1.30 for that reason. Treat that as the shape of the market rather than as a prediction about your file — we are a broker, we do not price anything, and a range is not an offer. Your actual figure comes from a funding partner in writing.
Is a factor rate the same as an APR?
No, and converting one to the other is misleading in both directions. An APR describes a cost that accrues over a period; a factor rate describes a fixed total that does not. You can calculate an effective annualised cost from a factor rate, and it will move sharply depending on how fast you deliver — which tells you something about your cash flow, but not about what you will pay in total.
Can I get the cost down by taking less?
Sometimes, though not in the way people expect. The rate itself is a judgement about your file rather than about the amount. But the total cost is the rate applied to the amount, so taking only what you actually need is the most reliable way to spend less — and it is the advice we would give whether or not it placed a smaller file.
Why this page has no prices on it
Because we do not set them and could not honour them. Draw Forward is a broker: we package files and put them in front of funding partners, who underwrite, price, and contract. We are not a party to the agreement. Every figure on this page is a hypothetical illustration for explaining the arithmetic, not a quote, an estimate, or a prediction of what any business will receive. Anyone in this market showing you a firm rate before seeing your statements is telling you something about how they work.
One form. Then a real conversation.
About two minutes, and it costs nothing. If the numbers on this page make the product look wrong for you, that is a useful outcome and we would rather you reach it here than after a week of process.