How financing cost is expressed
Business financing in Canada is priced two different ways, and they are not interchangeable. Term products quote an annual percentage rate. Short-term and revenue-based products quote a factor rate, which is a multiplier on the principal. Comparing a factor rate to an APR directly will always give the wrong answer.
Start an applicationFactor rate
Factor rates are used for revenue-based products. They are not annualised, so a 1.20 factor repaid over 6 months is materially more expensive than the same factor over 12 months. Always convert to total cost of capital before comparing to an interest rate.
APR (Annual Percentage Rate)
APR is the standard cost measure for traditional loans and lines of credit. Voxen does not publish a universal APR because pricing depends on the product, the lender, the term, and the risk profile of the specific file.
Why they are not comparable
A factor rate has no time dimension. The same 1.20 factor costs the same in total whether it is repaid over six months or twelve, which means the effective annualized cost roughly doubles as the term halves.
The comparison that holds across both conventions is total cost of capital: the full amount repaid, minus the amount received. That number is directly comparable between any two offers regardless of how each one is quoted.
Advance rate — factoring only
In factoring, the advance rate is typically 80–90% of the invoice face value, with the balance released on collection minus fees. In equipment and asset-based lending, advance rates vary by asset class, resale liquidity, and age.
How cost is typically quoted, by product
| Merchant Cash Advance (MCA) | Factor 1.15–1.45 |
|---|---|
| Business Line of Credit | ~8–20% APR |
| Invoice Factoring | 1.5–4% of invoice |
| Equipment Financing | ~7–18% APR |
| Bridge Loan | ~10–18% APR |
| Term Loan | ~8–22% APR |
| Inventory Financing | Quoted per file |
| Acquisition Financing | Stack-dependent |
What Voxen does not publish
Voxen does not publish fixed rates as universal claims. Pricing depends on the product, the lender, the term, and the risk profile of the specific file. Any rate quoted without those four inputs is a marketing number rather than a real one.
Frequently asked questions
How do I compare a factor rate to an interest rate?
You cannot compare them directly. Convert both to total cost of capital: the total amount repaid minus the amount received. That figure is comparable across any two offers. Comparing a 1.20 factor to a 20% APR as though they are equivalent understates the factor-priced offer substantially.
Does a lower factor rate always mean a cheaper offer?
No. A lower factor over a shorter term can cost more per month and constrain cash flow more than a higher factor over a longer one. Term, repayment frequency, and total repaid all have to be read together.
Related
- How an application moves from submission to funding — Every stage of a Voxen file, what happens at each one, and what holds it up.
- Minimum eligibility requirements by product — The baseline a business has to clear before a lender will look at a file, product by product.
- Documents required, by product — Exactly what to gather before applying, and the format each document has to be in.