What Is A Factor Rate On Small Business Financing? How To Understand The Cost Of Borrowing
Although factor rates and interest rates appear similar, there are some important differences which potential borrowers need to be aware of. Fixed fees (the fee determined by a factor rate) are only calculated once, before the loan is issued. The fee will stay the same, regardless of how long repayment takes. On the other hand, interest rates are accrued over time—the longer your loan is outstanding, the more fees will build up. Read on for more about the difference between factor rates and interest rates.