Factor rate to interest rate.
Short-term business loans are often quoted as a factor rate (borrow 50,000 at 1.2, repay 60,000). That hides the real cost. Put the quote in and see the yearly rate.
Equivalent yearly interest rate
—
Total repaid—
Cost of the loan—
Each repayment—
The yearly rate is the interest rate that gives the same repayments on a normal reducing loan. Because you repay from the first week, the real rate is far higher than (factor − 1) spread over the term.
Talk it through with a chartered accountant.
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