What working capital actually costs
How to read a funding offer in dollars instead of rates, and the three numbers that decide whether it is worth taking.
September 10, 2026 · 2 min read
Most funding offers are quoted in a way that makes them hard to compare. A factor rate is not an interest rate. An APR on a six-month advance flatters or punishes depending on how it is calculated. A weekly payment on its own tells you nothing about the total.
There are three numbers that matter, and you should have all three before you sign anything.
The total payback
What leaves your business in total. On a $125,000 advance at a 1.26 factor that is $157,500 — the advance plus $32,500 of cost. Every other way of quoting it is a way of slicing that number.
The payment, and how often
$157,500 over six months is 26 weekly payments of about $6,058. Over twelve months it is 52 payments of about $3,029. The cost has not changed. What changed is the pressure on your account each week.
A longer term is not cheaper. It is gentler.
When it ends
A fixed number of payments has an end. Ask whether anything compounds if you run past the term, and whether there is pressure to renew before it finishes. If either answer is vague, that is the answer.
Five questions before you sign
- What is the total payback, in dollars?
- How many payments, and how much is each one?
- What would the payoff figure be if I cleared it today?
- Are there fees that are not inside the total payback?
- What happens at the end of the term if I do nothing?
A lender who cannot answer those in a sentence each is not being careful. You are entitled to the arithmetic.