Business funding offers don't all speak the same language. One quotes a factor rate, another an interest rate, a third mentions an origination fee. Comparing them fairly means translating everything into the same question: how many dollars will I pay back, and how fast?
Factor rates
Common with merchant cash advances and revenue-based financing. The factor rate is multiplied by the amount you receive to get the total payback.
Example: $40,000 × 1.18 factor = $47,200 total repaid, so the cost of capital is $7,200.
Because the cost is set up front, ask whether an early payoff discount applies. With Sterling Advance, there are never prepayment penalties, and most products come with an early payoff discount — the sooner you pay, the more you save.
APR (annual percentage rate)
Used by term loans, SBA loans, lines of credit and equipment financing. APR expresses the yearly cost of borrowing, including interest and most fees. It's the best tool for comparing loans with different lengths.
Fees to ask about
- Origination or processing fees — often taken out of the funded amount, so you receive less than the approved number.
- Draw fees — some lines of credit charge each time you pull funds.
- Prepayment terms — is there a penalty, or a discount, for paying early? (With us, there's never a penalty — and most products reward early payoff.)
A simple 3-step comparison
- Net funding: the amount that actually lands in your account after fees.
- Total payback: every dollar you'll repay over the life of the deal.
- Payment size and frequency: daily, weekly or monthly — and whether your cash flow can comfortably handle it.
Total payback minus net funding is your true cost. Put each offer through those three lines and the best one usually becomes obvious.
Cheapest isn't always best
A lower-cost product that takes six weeks to fund may cost you more than a faster option if you miss a time-sensitive opportunity. The right offer balances cost, speed and a payment you can manage.
Transparency at Sterling Advance
Your advisor walks you through net funding, total payback and payment schedule for every offer before you commit — no fine-print surprises. Starting rates for each of our products are listed on our Products page.*
*Starting rates reflect current published market ranges and are for reference only — not an offer or commitment. Actual rates, terms and eligibility depend on your business's qualifications and the funding provider. This article is for general information and is not financial, legal or tax advice.
