Total repayment calculator
One amount, two instruments. See the monthly payment, the total repaid and the true cost of the money for a loan and for an advance on the same screen.
As a term loan or line of credit
- Monthly payment
- $1,709
- 36 payments
- Total repaid
- $61,520
- $11,520 of interest
- Total cost of the money
- $12,520
- Interest plus fees, on $49,000 received
As a revenue-based advance
- Each business day
- $516
- 126 debits, about $10,833 a month
- Total repaid
- $65,000
- Equivalent annual rate 122.7%
- Total cost of the money
- $16,500
- Factor plus fees, on $48,500 received
Reading the two columns together
The loan costs $12,520 over 36 months and takes $1,709 a month. The advance costs $16,500 over 6 months and takes about $10,833 a month. The loan costs less in dollars and takes far less from each month. If the business qualifies for it and can wait for it, it is the better instrument.
How to use the comparison
A bank quotes an annual rate over years. A funder quotes a factor rate over months. Put next to each other without translation they cannot be compared, which is how an owner ends up paying $15,000 for six months of money while believing it was cheaper than a loan at 14 percent. This page does the translation. Enter the amount once, then the terms of each offer as they were given to you.
Two numbers matter. The total cost of the money, which is what you pay for the privilege of having it. And the monthly draw on the business, which is what you have to survive. A loan is almost always cheaper on the first and gentler on the second; the advance earns its place only when the money is needed in days, the purpose is short, and the return clears the cost. When those three are true, we will say so. When they are not, we will say that instead.
Questions about comparing offers
Which is cheaper, a loan or an advance?+
In dollars, usually the loan, because it is priced on an annual rate. The advance can cost less in total when the term is very short, but it takes much more from each month. The right comparison is total cost against what the business can carry monthly.
Why does the advance show an equivalent annual rate?+
So the two columns speak the same language. A factor rate is not a rate; it is a multiplier on the whole amount. Converting it to an annual rate, using the daily debits and the fees, is the only honest way to set it next to a loan.
Is the loan calculation exact?+
It is the standard amortising formula used by banks and SBA lenders: equal monthly payments, interest on the declining balance. Real loans may add a closing cost or a prepayment term; the figure is accurate to within a few dollars for a conventional term loan.
Does Enrichment Capital show these figures on its offers?+
Yes. Every offer we present, loan or advance, shows the amount, the total repayment, the payment schedule, every fee and the total cost of the money on one page, before you sign anything.
Have two offers in hand?
Send them to us before you sign either. We put them on one page, tell you which one the business can carry, and whether we can do better. No obligation, no fee to you.