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
For 6-month working capital or MCA, 15–25 cents on the dollar is competitive. Above 35 cents is expensive.
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