What is a Factor Rate? Simple Explanation

Factor Rate Examples

• 1.10x: Borrow £10k, repay £11k (£1k cost / 10%)
• 1.20x: Borrow £10k, repay £12k (£2k cost / 20%)
• 1.30x: Borrow £10k, repay £13k (£3k cost / 30%)
• 1.40x: Borrow £10k, repay £14k (£4k cost / 40%)

Typical Factor Rates UK 2025

• Excellent (1.08-1.15x): iwoca for strong businesses
• Good (1.15-1.25x): YouLend, iwoca, 365 Finance typical
• Average (1.25-1.35x): Most providers for average risk
• High (1.35-1.45x): Newer businesses or higher risk

Factor Rate vs APR

Factor rate: One-time multiplier (doesn't change with time)
APR: Annual rate (cost increases the longer you borrow)

Example Comparison:

• MCA at 1.25x: £50k costs £12,500 whether repaid in 6 or 12 months
• Loan at 10% APR: £50k costs £2,500 if repaid in 6 months, £5,000 if repaid in 12 months

How to Calculate Your Cost

Formula: Amount × Factor Rate = Total Repayment

Cost: Total Repayment - Amount = Your Cost

Real Examples:

• £20k × 1.15 = £23k total (£3k cost)
• £50k × 1.25 = £62.5k total (£12.5k cost)
• £100k × 1.20 = £120k total (£20k cost)

Conclusion

Factor rate is simple: It's the total multiplier showing exactly what you'll repay. Lower is better. iwoca's 1.08x beats YouLend's 1.10x which beats 365's 1.15x.