To read a financing offer, translate it into four numbers and one paragraph: the true annualized cost (not the factor rate), the payment frequency and what happens if you miss one, every fee by name, the prepayment treatment, and — in plain words — what the lender can do on a default. Any offer that resists that translation is telling you something. A legitimate lender will walk you through all five without flinching.
Factor rates aren’t interest rates: a “1.3 factor” on a 6-month advance doesn’t mean 30% — repaid that fast, the annualized cost is often north of 60%. Ask every lender for the total dollar cost of capital and the equivalent annual rate, in writing. If they’ll only talk in factors and daily payments, that’s the answer.
Payment frequency is the survival question: a monthly, interest-only payment lets a business absorb a slow month; a daily or weekly ACH draft doesn’t care that your receivables run 45 days. Stacked advances — a second or third position on the same revenue — are how a manageable obligation becomes a spiral. Ask: how often do I pay, what happens after one missed draft, and will you fund behind an existing advance?
Read for the clauses that change who’s in control: a confession of judgment waives your right to defend yourself in court before a dispute exists. A personal guarantee reaches past the business. A UCC lien on “all assets” can make it harder to borrow anywhere else. None of these is automatically disqualifying — but each should be named, explained, and priced, not buried. (This is general information, not legal advice — have your attorney review any agreement before you sign.)
The questions to ask any lender — including us: What does this cost in dollars if I repay on schedule, and if I repay early? Which fees exist beyond the rate, by name? What do you file against me or my business, and when? Who do I talk to if the plan slips — a person or a collections queue? We publish our answers across this site, and any lender worth your signature will answer the same five without a pitch attached.
The pattern behind all of it: products designed around your failure make money when you struggle; products designed around your plan make money when you succeed. Before you sign anything — from us or anyone — make the offer answer one question: does this lender do better when I do better, or when I don’t?
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Related: Bridge loans · Lending in Texas