Small-business financing is deliberately hard to compare: one lender quotes an APR, another a factor rate, a third a weekly payment with no rate at all. The fix is to ignore the vocabulary and force every offer into the same four numbers.
1. Net funds — what actually lands in your account
The advance minus every upfront deduction: origination, packaging, ACH setup, "platform" fees. A $100,000 approval with $2,500 withheld is a $97,500 loan, and every cost calculation should start from that number, because that's the money you got.
2. Total payback — every dollar leaving, in writing
Payment amount × number of payments, plus any fees charged along the way or at payoff. Total payback minus net funds is the true dollar cost of the capital. This subtraction is the single most clarifying act in the whole process, and some lenders will resist putting the inputs in writing. Insist.
3. Effective APR — the number that makes offers comparable
Dollar cost alone can't compare a 6-month product against a 5-year one. The effective APR — the annualized rate that makes the payment stream worth the net funds — can. It's the same yardstick used for every consumer loan disclosure, and computing it from any payment schedule is exactly what the free calculator does. Quoted a factor rate? Convert it first.
4. Cash-flow burden — can your worst month carry it?
A daily debit of $540 is roughly $11,700 a month gone from operating cash. The offer might be affordable on paper against your average month and lethal in your slowest one. Whatever the APR says, the payment schedule has to clear your worst realistic month with room to spare.
A worked example
You need about $100,000. Two offers arrive:
| — | Offer A: bank term loan | Offer B: cash advance |
|---|---|---|
| Quoted as | 10.5% APR, 5 years | 1.35 factor rate |
| Net funds (after fees) | $98,000 | $97,500 |
| Payment | $2,149 / month | $540 / business day |
| Total payback | $128,958 | $135,000 |
| Dollar cost | $30,958 | $37,500 |
| Effective APR | ~11.4% | ~72% |
| Monthly cash-flow drain | $2,149 | ~$11,700 |
The dollar costs look comparable — $31k versus $37k — which is exactly how expensive money gets sold. The APR line tells the real story: Offer B charges six times the annual rate and consumes five times the monthly cash, because the same-sized fee is packed into a year instead of five. Offer A costs slightly more in a spreadsheet cell nobody should care about (total dollars over five years) and vastly less in every way that matters.
When the expensive offer still wins
Speed and eligibility are real constraints. If the cheap money takes six weeks you don't have, or requires collateral you can't pledge, the advance may be the only bridge available. Then the questions become: is the thing being bridged short and certain, and is the profit on it comfortably larger than the cost of the money? Bridging a signed purchase order can justify expensive capital. Bridging payroll with no change in sight cannot — that's a solvency problem wearing a financing costume.
Do this on one sheet
The free calculator converts any single offer to its true cost. The $29 workbook lines up five offers side by side — APR, total cost, amortization, and the week-by-week cash-flow impact — plus the lender-package checklist that gets you access to the cheaper rows of the table.
Free True Cost Calculator Full Workbook — $29Educational content — not financial advice. Figures are illustrative; verify every number against actual loan documents before signing.