Live market data
Pulled from official U.S. government APIs. Click a card to view the source.
TL;DR
Before signing any business loan, calculate four numbers: monthly debt service vs monthly revenue (target under 12–15%), debt service coverage ratio (target 1.25+), total cost of capital (total payback minus principal), and cents-on-the-dollar cost (cost divided by principal).
1. Monthly debt service ratio
Monthly loan payment ÷ monthly revenue. Target under 12–15%. Above 20% means you're likely over-leveraged.
2. Debt service coverage ratio (DSCR)
Annual net operating income ÷ annual debt service. SBA wants 1.25+. Banks want 1.35+.
3. Total cost of capital
Total payback minus principal. A $100K loan with $130K payback has $30K total cost — regardless of how it's structured (factor or APR).
4. Cents-on-the-dollar (CoD)
Total cost ÷ principal. The single best apples-to-apples comparison across product types. $30K cost on $100K = 30 cents on the dollar.
Pros of running the math first
- •Avoids over-leverage that triggers default
- •Identifies the cheapest option across product types
- •Strengthens your negotiating position
Common mistakes
- •Comparing APR to factor rate without converting
- •Ignoring origination fees in cost calculations
- •Calculating DSCR off gross revenue instead of NOI
- •Missing the impact of daily debit on cash flow
Run the numbers
MCA / Factor Rate Calculator
Convert a factor rate offer to total cost, daily remit, and approximate APR. Useful for comparing MCA offers against term loan APRs.
Methodology
Total payback = principal × factor. APR-equivalent ≈ (factor − 1) × (365 / term days). This is an approximation — true APR is slightly higher because daily remittances reduce balance over time. APR is defined per the federal Truth in Lending Act (12 CFR § 1026, Regulation Z). MCAs are typically structured as a purchase of receivables and not subject to TILA APR disclosure, but several states (CA SB 1235, NY S5470) require commercial financing disclosures with an APR-equivalent.
Business Term Loan Calculator
Standard amortization: fixed APR, fixed weekly payment. Same formula banks and SBA lenders use.
Methodology
Standard amortization formula: P × r / (1 − (1 + r)−n), where r is the monthly rate (APR / 12) and n is the term in months. APR is the annual percentage rate as defined in the federal Truth in Lending Act (12 CFR § 1026.22). Actual lender quotes may include origination fees that increase APR.
Compare Two Offers (APR-equivalent)
Paste any two offers — MCA, term loan, line of credit — and normalize them to the same yardstick.
Lowest APR-equivalent wins on cost. Cents-on-the-dollar (CoD) shows total cost per dollar borrowed regardless of term length.
Related questions
Related guides
Business Loan Rates Explained (1970)
APR, factor rate, and total cost of capital — what the numbers actually mean and how to compare offers across products.
How to Read a Loan Factor Rate (and Convert to APR)
Factor rates look smaller than APR but cost more. Here's how to read them and convert to a comparable annual cost.
MCA vs Term Loan: Which is Right for Your Business in 1970?
Side-by-side comparison of merchant cash advances and business term loans — speed, true cost, qualification, repayment structure, and which fits your situation.
Sources & references
- Truth in Lending Act, Regulation Z (12 CFR § 1026)— Consumer Financial Protection Bureau
- Bank Prime Loan Rate (DPRIME)— FRED · Federal Reserve Bank of St. Louis
- Daily Treasury Par Yield Curve Rates— U.S. Department of the Treasury, Fiscal Data