Factor Rate Calculator for UK Business Finance
Short-term business finance is rarely quoted as an interest rate. Enter the amount advanced, the factor rate you have been offered and the repayment term to see exactly what you repay, what it costs per £1,000 borrowed, and how the deal compares with an interest-bearing loan.
Factor rate finance at a glance
A factor rate is a fixed multiplier applied to the amount advanced: borrow £50,000 at a factor rate of 1.2 and £60,000 is repayable in total, however quickly you clear it. UK short-term lenders typically price between 1.10 and 1.50 over terms of 3 to 24 months.
- What it is
- A fixed multiplier applied to the advance — 1.2 on £50,000 means £60,000 repayable
- Typical range
- Factor rates of 1.10 to 1.50 across UK short-term lenders
- Term
- Usually 3 to 24 months — factor-rate facilities are short-dated by design
- Early settlement
- The cost is fixed at drawdown, so repaying early rarely reduces what you owe
- Best for
- Businesses funding a short, defined need where certainty of cost matters more than headline rate
Last reviewed: 25 August 2026 by the SME Finance Hub broking team. Editorial policy
Work out the cost of a factor rate
Your Funding Breakdown
What about settling early?
With a factor rate the total cost is fixed the moment you draw the funds, so clearing the balance early usually saves nothing — you still repay £60,000. A minority of lenders will discount a settlement figure; we ask on your behalf before you commit. If you expect to repay early, an interest-bearing term loan is often the cheaper route — use our business loan calculator to compare.
This calculation shows estimated costs based on your selections. Actual rates may vary based on your business profile and credit assessment.
Indicative figures only
The factor rate you are offered depends on trading history, sector, turnover and the term you need. This calculator models the arithmetic — a soft-search application gives you real figures from lenders with no impact on your credit score.
How factor rates work
An interest rate is charged on the balance you still owe, so it falls as you repay. A factor rate does not behave that way. It is applied once, to the full advance, at the point the money lands in your account. Borrow £50,000 at 1.2 and £60,000 is repayable — whether you clear it over three months or eighteen.
That makes factor-rate finance simple to budget for, because the total never moves. It also makes it expensive on very short terms once you convert it to an annualised figure. The same 1.2 factor rate is a reasonable deal over eighteen months and a costly one over three, which is why comparing the cost per £1,000 per month matters more than comparing headline rates.
If your business could repay early, an interest-bearing facility is normally the cheaper route — model it on our business loan calculator and compare the two side by side. For an independent overview of the funding options available to UK businesses, the government's business finance and support finder is a neutral starting point.
Worked factor rate examples
| Advance | Factor rate | Total repayable | Cost of finance | Monthly over 6 | Monthly over 12 |
|---|---|---|---|---|---|
| £25,000 | 1.15 | £28,750 | £3,750 | £4,792 | £2,396 |
| £50,000 | 1.20 | £60,000 | £10,000 | £10,000 | £5,000 |
| £75,000 | 1.25 | £93,750 | £18,750 | £15,625 | £7,813 |
| £100,000 | 1.30 | £130,000 | £30,000 | £21,667 | £10,833 |
Figures assume equal instalments and exclude any arrangement fee. Rounded to the nearest pound.
Products priced on factor rates
- Card terminal loans and cash advances repaid from card takings
- Short-term business loans over 3 to 24 months
- Same-day business funding where speed is the priority
- Invoice finance as a lower-cost alternative for B2B invoicing
Other calculators
- Business loan calculator for interest-bearing term loans
- Merchant cash advance calculator for card-income repayments
- Compare business loan options
Factor rate questions
Ready for Expert Funding Guidance?
Get clear, expert advice from our experienced brokers. No hidden fees, transparent service, no obligation.
FCA Regulated • No Obligation Service • All Costs Disclosed Upfront