Business Funding Factor Rates Explained UK
What is 1.25x factor rate? Simple: Repay £1.25 for every £1 borrowed. Real examples, cost calculations, and how to get the lowest factor rate explained.
Factor Rate in 10 Seconds
Factor rate = Total repayment multiplier
- • 1.10x = Repay £1.10 per £1 (10% cost)
- • 1.25x = Repay £1.25 per £1 (25% cost)
- • 1.40x = Repay £1.40 per £1 (40% cost)
Real Factor Rate Examples
Example 1: £20,000 at 1.15x
- Amount borrowed: £20,000
- Factor rate: 1.15x
- Total to repay: £20,000 × 1.15 = £23,000
- Cost: £3,000 (15% of amount)
Example 2: £50,000 at 1.25x
- Amount borrowed: £50,000
- Factor rate: 1.25x
- Total to repay: £50,000 × 1.25 = £62,500
- Cost: £12,500 (25% of amount)
Example 3: £100,000 at 1.30x
- Amount borrowed: £100,000
- Factor rate: 1.30x
- Total to repay: £100,000 × 1.30 = £130,000
- Cost: £30,000 (30% of amount)
Factor Rates by Provider (October 2025)
iwoca:1.08 - 1.25x (BEST)
YouLend:1.10 - 1.35x
365 Finance:1.15 - 1.40x
Capify:1.20 - 1.45x (HIGHEST)
What Determines Your Factor Rate?
- Revenue strength: £20k/month = 1.10x. £5k/month = 1.30x
- Time trading: 24 months = 1.12x. 6 months = 1.28x
- Sales trend: Growing 20% = 1.10x. Declining = 1.35x
- Credit history: Clean = 1.08x. CCJs = 1.20-1.30x
- Industry: Low-risk retail = 1.10x. High-risk hospitality = 1.25x
How to Get Lowest Factor Rate
- Apply to iwoca: Has lowest minimum rates (1.08x)
- Wait until revenue is strong: £15k+/month gets best rates
- Show 12+ months stable trading: Longer history = lower rate
- Apply when sales growing: Growth trend = better terms
- Compare multiple offers: Rates vary 0.10-0.30x between providers
Factor Rate vs APR: What's the Difference?
Factor Rate (MCAs): Total cost multiplier. 1.25x = 25% total cost regardless of repayment time.
APR (Loans): Annual percentage rate. 10% APR = 10% per year. Total cost depends on loan term.
Comparison: £30k Borrowed
- MCA at 1.25x: £7,500 cost over 8 months (25%)
- Loan at 10% APR over 2 years: £3,180 cost (10.6%)
MCA is 2-3x more expensive than loans - but approval is 2x faster and easier.
Conclusion
Factor rates range from 1.08x (excellent - iwoca) to 1.45x (expensive - Capify). A 0.20x difference on £50k advance = £10,000 savings. Always compare 3-4 providers to find lowest rate.