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A 1.35 factor sounds like 35%. Paid back daily over six months, it costs far more than that. Here is why, with the math.
A factor rate tells you the total cost. It does not tell you how fast you pay it, and speed is what makes an MCA expensive.
Multiply the funding by the factor to get what you owe back. $50,000 at 1.35 means $67,500: a cost of $17,500. That cost is fixed on day one. Paying early usually does not lower it.
An interest rate is a cost per year on money you still have. With an MCA you start paying back the next business day. Halfway through, you have already returned about half the money, but the cost was set on all of it. On average you only had the use of about half the funding for the whole term.
These are estimates using 252 business days a year and no fees. Add a $1,500 fee taken out of the funding and the six-month version rises to about 140%. The faster the payback, the higher the real cost of the same factor rate.
Because an MCA is written as a purchase, not a loan, federal lending disclosure rules do not apply. A growing number of states now require commercial financing disclosures anyway. California and New York, among others, require funders to show an estimated APR for many sales-based financing offers. If your offer came with a disclosure page, find the estimated APR on it and compare it with what you are really paying.
Connect your bank (read-only) and add your agreements. Your reconciliation report is usually ready the same business day.
Check my MCA →Education only, not legal advice. Agreements differ; your contract's exact wording controls.