# Ecommerce financing cost calculator: bank loan vs sales-based advance

> Compare a term loan with a revenue-based or daily-repayment advance as a true APR, with the total cost and payback time side by side. Free, in your browser.

Source: https://keelhq.io/tools/financing-cost-calculator · Published 2026-10-24 · Last verified 2026-10-24

**TL;DR:** A factor rate looks like a flat fee, but an advance repaid from daily sales is paid back fast, so its yearly cost is much higher than the fee suggests. Enter a term loan and an advance for the same amount to see each as an APR, with total cost and payback time. Nothing leaves your browser.

## The formulas

loan payment = P × i ÷ (1 − (1 + i)^−n), where P is the amount, i the monthly rate and n the number of months

advance total to remit = amount × factor rate; payments = total to remit ÷ (daily sales × share remitted)

APR = r × periods per year, where r makes the present value of every payment equal the cash you received

effective annual rate = (1 + r)^periods per year − 1

The cash you receive is the amount less any upfront fee. The loan assumes level monthly payments with monthly compounding. The advance assumes your sales stay at the daily average you entered, so the payments are equal and the last one is whatever is left.

## Worked example

You need $50,000. A two-year loan at 12% with a 2% fee costs $2,354 a month and $7,488 in all, an APR of 14.0%. An advance at a 1.12 factor, repaid from 10% of $2,000 daily sales, costs $6,000 and is paid back in 280 days. That is less money, but an APR of 30.0% (35.0% compounded), because you hold the money for under a year.

## What this does not do

It is a standalone estimate. Real offers can have minimum payments, cap or extend the term, charge other fees, or change the remittance share, and lenders may quote APR differently. Check the contract. Keel HQ's cash page shows your forecast, but it does not price financing, so treat this page as a quick comparison and not as the app's numbers.

## When to use it

Before you take an advance to fund a purchase order. If the APR is above what the inventory earns you, the stock may not pay for the money.

## FAQ

### What is a factor rate?

The total you repay divided by the amount you receive. A factor of 1.12 on $50,000 means you repay $56,000. Shopify Capital's glossary defines the total to remit as the amount received multiplied by the factor rate.

### Why is the APR of an advance so much higher than its fee?

APR spreads the cost over a year. A 12% fee paid back in about nine months costs more per year than 12%, and the faster the advance is repaid from your sales, the higher its APR, even though the dollar cost does not change.

### How is the APR calculated?

It finds the rate per period at which the payments you make are worth the cash you received today, then multiplies by the periods in a year (12 for a loan, 365 for daily remittances, 52 for weekly). That is the actuarial method in the CFPB's Regulation Z, Appendix J.

### What is the effective annual rate?

The same periodic rate compounded for a year instead of multiplied. For daily payments the two differ noticeably, so both are shown.

### Does an upfront fee change the cost?

Yes. The fee comes out of the cash you receive, so you repay interest on money you never had. The calculator counts the fee as cost and uses the smaller cash amount to find the APR.

### Does Keel HQ store what I enter?

No. The calculator runs in your browser, and nothing you type is sent anywhere.

## Sources

- [Appendix J to Part 1026: Annual Percentage Rate Computations for Closed-End Credit Transactions](https://www.consumerfinance.gov/rules-policy/regulations/1026/j/), Consumer Financial Protection Bureau (accessed 2026-10-24)
- [Shopify Capital glossary of terms](https://help.shopify.com/en/manual/finance/shopify-capital/shopify-capital-glossary), Shopify Help Center (accessed 2026-10-24)