Take a real case: a restaurant with $30,000/month in revenue needs $75,000 to renovate the kitchen. Two offers come in.
Offer A, SBA 7(a): $75,000 over 60 months, 10.5% APR. Monthly payment: $1,612. Total to pay: $96,720.
Offer B, MCA: "We give you $75,000 today. You pay back $105,000 in 9 months." That sounds like a "factor rate of 1.40." Daily ACH payment: ~$555. Total to pay: $105,000. Equivalent APR: ~89%.
The factor rate trick
A factor rate of 1.40 sounds "manageable" because it isn't presented as an interest rate, it's a multiplier. But once you convert it to APR (the honest metric), a 1.40 factor over 9 months works out to around 89%. That's 8x more expensive than an SBA loan over the same period.
"But SBA is slow"
True: SBA can take 30–60 days. An MCA can fund in 48 hours. If the need is genuinely urgent and you'll generate more with the capital than the MCA costs, it can make sense. But most of the time an MCA is sold, it isn't a real emergency, it's a high-pressure sale.
What an ethical broker does
Before offering you an MCA, an ethical broker should: (1) calculate the equivalent APR, (2) offer you the SBA or a term loan first if you qualify, (3) explain the total cost difference, (4) confirm with you that the urgency justifies the cost.
If a broker is selling you an MCA without showing you the equivalent APR, that broker isn't working for you.
At Versatil, every product is compared against the alternatives before we present it. Your job isn't to pick from the options a broker wants to sell, it's to see every option, in your language, with the math made clear.
Ready for an honest conversation about capital for your business?