How does a factor rate work on a business advance?

A factor rate is a simple multiplier (not an APR) used to calculate total repayment. A $100,000 advance with a 1.3 factor rate means you repay $130,000 total. Factor rates typically range from 1.1 to 1.5. To compare to an APR, you need to factor in repayment speed: a 1.3 factor rate repaid over 6 months equates to roughly 60-80% APR — far more expensive than it initially appears.