APR Disclosure Calculator
Convert MCA factor rates to APR, simple interest rate, and finance charge for state compliance disclosures.
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
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.
Run These Numbers Too
RTR Calculator
Calculate total Revenue to Receive, daily payment, and repayment timeline for any MCA deal.
Truth-in-Lending Calculator
Generate TILA-style disclosure metrics for commercial financing transactions.
Fee Disclosure Generator
Calculate all fees on an MCA deal and generate a merchant-facing disclosure breakdown.
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