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APR Disclosure Calculator

Convert MCA factor rates to APR, simple interest rate, and finance charge for state compliance disclosures.

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Why Is APR Disclosure Required?

Multiple states now require commercial financing providers -- including MCA funders and brokers -- to disclose the annual percentage rate (APR) equivalent of their products. New York's Commercial Finance Disclosure Law (effective 2024), California's SB 1235, Virginia's Commercial Finance Disclosure Act, Utah's Commercial Financing Registration Act, and Connecticut's disclosure requirements all mandate that merchants receive clear, standardized cost information before signing. Because MCA transactions use factor rates (not interest rates), converting to APR is non-trivial and depends on the repayment timeline. This calculator performs that conversion so brokers can generate compliant disclosures and avoid regulatory penalties that can reach $10,000+ per violation in some states.

How to Use This Calculator

Enter the funded amount and total repayment

The funded amount is net to merchant. Total repayment (RTR) is the full amount the merchant will pay back. The difference is the finance charge.

Estimate the term in business days

This is critical for APR calculation. A 1.30 factor rate over 120 business days produces a very different APR than the same rate over 240 days. Use your best estimate based on daily payment and RTR.

Review all metrics for disclosure

Different states require different metrics. New York requires APR and total cost. California requires APR, finance charge, and total repayment. Generate all metrics to cover multi-state compliance.

Key Concepts

APR (Annual Percentage Rate)

The annualized cost of the advance expressed as a percentage. For MCA, APR is estimated by annualizing the simple interest rate. APRs on MCA deals typically range from 25% to 100%+ depending on the factor rate and term length.

Finance Charge

The total cost the merchant pays for the capital. Equal to RTR minus funded amount. This is the number that must be prominently disclosed in most state requirements.

Cost Per $100

The finance charge expressed per $100 of funded amount. A simple metric that merchants can easily understand. $32 per $100 is more intuitive than "1.32 factor rate" for most business owners.

Expert Insights

State Compliance Is Non-Negotiable: New York's DFS has already begun enforcement actions against MCA providers who fail to provide compliant disclosures. Fines start at $2,000 per violation and can escalate. California's DFPI is similarly aggressive. If you operate in these states, every deal must include a standardized disclosure document. This is not optional -- it is the cost of doing business in regulated states.

APR as a Sales Challenge: When merchants see a 60-80% APR on an MCA disclosure, sticker shock is common. Prepare for this by contextualizing: the merchant is borrowing for 6-8 months, not a year. The total dollar cost ($32,000 on a $100K deal) is the relevant number, not the annualized rate. Compare the total cost to the revenue the capital generates. If $100K in capital generates $200K in additional revenue, the $32K cost is a 6.4x ROI.

Frequently Asked Questions

As of 2026, New York, California, Virginia, Utah, and Connecticut have enacted commercial finance disclosure laws. Florida, New Jersey, Illinois, and several other states have legislation in various stages. Check the most current state-by-state requirements as this area is changing fast.

Not exactly. Traditional loan APR is calculated using standardized Regulation Z methodology. MCA APR is an estimate because the repayment timeline is variable (it depends on merchant revenue). Most state disclosure laws specify the methodology to use, which approximates Reg Z but accounts for the daily payment structure.

It depends on the state. In New York, the financing provider (funder) is primarily responsible, but brokers who present offers are also required to provide disclosures. In California, the provider must deliver the disclosure before the merchant signs. In practice, many funders provide disclosure templates, but brokers should verify compliance for every deal.

Results are estimates for educational purposes only. Actual amounts may vary based on your specific financial situation, market conditions, and other factors. This calculator does not constitute financial advice.