BUSINESS FINANCE GLOSSARY
Factor Rate
Factor Rate
A multiplier sometimes used to calculate total payback on certain financing products.
What does Factor Rate mean?
A multiplier sometimes used to calculate total payback on certain financing products. Professionals may calculate, document or apply this concept differently depending on the transaction, accounting method, lender policy and governing documents. Borrowers should confirm the precise definition used in any term sheet or agreement.
Factor Rate in context
A $100,000 advance at a 1.25 factor implies $125,000 contractual payback before other terms.
Why it matters in financing
Factor Rate can influence how a lender, investor or advisor evaluates risk, pricing, structure, repayment capacity or transaction economics. It should be considered together with the complete financial picture rather than used alone.
Related business finance terms
Educational information only. This definition is general, may not match a particular lender or contract, and is not financial, accounting, tax or legal advice.