The starting point
Two options with the same advertised amount can leave you with different cash and different payment demands.
Get the figures in writing
Write down the advertised amount, deducted fees, net proceeds, sum of scheduled payments, additional fees and payment calendar. Ask which figures are fixed and which can change. One rate alone cannot describe the full obligation.
Compare the cash you can actually use
Option A: advertises $30,000, deducts $1,000 and requires payments totaling $36,000. You receive $29,000; the difference from total payments is $7,000.
Option B: delivers $30,000 without a deduction and requires payments totaling $36,000. The difference is $6,000.
This shows why net proceeds matter. It does not calculate APR, compare duration or establish which option fits. Add other fees, variable payments or conditional discounts separately if they apply.
Put payments on your calendar
Daily, weekly and monthly payments can affect a project-based or seasonal business differently. Review the full schedule: do not automatically treat a month as four weeks or assume every day is a collection day.
Test a lower-sales week. After payroll, rent, suppliers and existing obligations, where would the new payment come from? Total cost and the ability to pay it are related but different questions.
Clarify what each figure means
A factor of 1.20 applied to $30,000 produces $36,000 before other contractual adjustments. It is not a 20% annual rate: it does not by itself account for duration, fees or repayment timing. Do not compare a factor directly with an APR.
- Is there a personal guarantee or lien?
- What happens with early payoff? Does the cost actually decrease?
- What fees apply to late payments or insufficient funds?
- Does renewal pay off the prior obligation or add another one?
Ask for an explanation of any term you cannot describe in your own words before deciding.
Further reading
Educational content. rédito is a commercial financing broker, not a lender. Availability, approval and terms depend on the provider. Examples are hypothetical. Public sources do not endorse rédito.
Put it in context
Your business. Your next step.
Use what you learned to explore a structure or start with your business profile.