Pricing
Pricing terms. Defined.
How small business funding is priced, factor rates, APR, fees, and how to compare offers apples-to-apples.
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Every pricing term.
5 terms
Pricing
APR vs Interest Rate
Interest rate is the cost of borrowing the principal; APR adds origination fees and other charges to express the true annualized cost.
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Double-Dipping
Double-dipping is when a broker or lender charges interest or fees on a rolled-over balance that has already been paid for in the previous advance.
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Factor Rate
a.k.a. buy rate, purchase rate
A factor rate is a decimal multiplier (e.g. 1.25) applied to a funded amount to express total repayment, instead of an interest rate.
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Origination Fee
a.k.a. closing fee, funding fee
An origination fee is a one-time charge, usually 1% to 5% of the funded amount, deducted at closing to cover underwriting and disbursement.
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Yield
a.k.a. investment yield, lender yield, effective yield
Yield is the total return a lender earns on a loan or advance, expressed as an annualized percentage of the capital deployed.
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