Offered a 1.4 Factor-Rate Short-Term Business Loan? Read This Before You Sign
Last updated: 15 August 2025
By Michael Pajar, Director & Business Finance Broker, Casey Asset Finance
You’ve just been approved. Great. Then you saw the quote: 1.4 factor rate over 6 months! Your stomach dropped, you opened Google, and you’re here to check if there’s a better deal.
This guide is written for that exact moment.
What a 1.4 Factor Rate Really Means (Plain English)
Factor rate is a fixed multiplier on the amount borrowed.
Example: Borrow $50,000 at 1.4 → you must repay $70,000 in total.
On a 6-month term, that’s roughly $20,000 in cost over half a year.
The simple annualised equivalent is about 80% p.a. (and can be much higher if you to choose to ‘renew’).
Many short-term lenders repay daily (rarely weekly), so cash flow pressure can bite hard—fast.
Quick sense-check: if the total repay feels crushing, it probably is. Don’t sign under pressure—ever. You do have options.
Why You Were Offered That Quote
Short-term business loan lenders price for speed and risk. If a lender is moving money in 24–48 hours with minimal docs, they’ll often price steeply because:
Your business is new, highly seasonal, or has recent volatility.
You have some financial dishonours and negative days
Financials aren’t up-to-date or BAS hasn’t been lodged.
There’s urgency (ATO, payroll, supplier deadlines).
The product is low-doc/no-doc and short term (higher risk, shorter runway).
None of this makes you a “bad borrower”. It just means the first offer you received may not be the best you can get.
The “Better-Loan Window” (You’re In It Right Now)
The most powerful time to improve your outcome is after you receive a quote but before you accept it.
What we often see in this window:
A switch from factor rate to interest rate with principal + interest repayments.
Longer terms (e.g., 9–24 months) that reduce the repayment squeeze.
Lower total cost and weekly or monthly frequency instead of daily.
Clearer early-payout terms (so you’re not stuck repaying the full factor if you settle early).
CTA — Get a second opinion now: Send the quote you’ve received and your rough monthly turnover. I’ll tell you—same day—if we can beat it, by how much, and how fast funds could land.
A Real-World Style Comparison (No hype, just maths)
The quote you got: $100,000 at 1.4 factor over 6 months → $140,000 total repay.
A common alternative I arrange: $100,000 over 36 months at a competitive interest rate (for illustration, say ~22% p.a. aka an 11.89% pa simple annual rate).
Simple annual estimate ≈ $11,890 cost for the year → ~$111,890 total.
Repayments are spread across 36 months, not crammed into 6, so cash flow breathes—significantly.
Every scenario is unique—but the point is the structure: switching product type and term is often where most of the savings and stress-reduction come from.
Free quote review: Text me your offer. I’ll translate it into apples-to-apples figures (including the equivalent annualised rate) and show you your best options—no obligation.
Why Go Through a Business Finance Broker (Instead of Applying Direct)?
1) Protect your credit score
Applying direct with multiple short-term business loan lenders can trigger multiple hard enquiries. Even lenders that advertise “no credit check” usually run a hard check before issuing a final offer. I triage in the background so your file isn’t peppered with enquiries you didn’t need.
2) One conversation, access to many lenders
I compare quotes across the market and fit your scenario to the right product type, not just the fastest product.
3) Faster answers, fewer surprises
You get clear visibility on total cost of finance, repayment frequency, early-payout terms, and covenants before you sign—so there are no “I didn’t know that” moments later.
4) Negotiation leverage
A live approval gives us leverage. I use it to push for sharper pricing or better structure elsewhere.
Text — “Beat my quote”: If you already have a quote or an approval, forward it. I’ll come back with either (a) a cheaper offer, (b) a smarter structure, or (c) a clear reason to walk away.
Where Brand-Name Short-Term Lenders Fit In
In Australia, many businesses first receive quotes from short-term business loan lenders such as Bizcap, TruCap, SkyeCap, Capify, BizFund, and AuzCap. These providers can be useful when speed is critical and documentation is thin.
My role isn’t to criticise any lender—it’s to ensure you don’t overpay for the speed you need. Often I’ll keep the same speed but improve total cost, term, or repayment frequency by placing you with a different product or lender more suited to your profile.
Get matched properly: Tell me your loan amount, purpose, and monthly turnover. I’ll shortlist the best-fit options (including mainstream and specialist lenders) and explain the trade-offs in simple English.
How To Use This Moment (Step-By-Step)
Pause—don’t sign yet.
Screenshot the quote and note: amount, total repay, term, repayment frequency, fees, early-payout terms.
Send it through with a quick note about your cash-flow cycle (weekly, fortnightly, monthly).
Get a same-day second opinion—including the equivalent annualised rate and realistic alternatives.
Choose the structure that serves your cash flow, not the other way around.
FAQs (The Questions You’re Probably Thinking)
What exactly is a factor rate?
It’s a fixed multiplier on the amount borrowed. A 1.4 factor means you repay 140% of what you borrow, regardless of how early you repay (check your contract—many factor products don’t reduce the total if you settle early).
Can I save money by paying out early?
With many factor-rate contracts, no—you still owe the full factor. With interest-rate products, early payout often reduces the total cost. Getting the right structure up front matters.
Will using a broker hurt my credit?
My process is designed to minimise hard enquiries. I pre-screen and match first. We only authorise a hard enquiry when we’re confident it’s the right lender and product. Unfortunately, there are many online brokers that I’ve seen quote on quote smash credit scores in a short period of time.
How fast can I switch and still get funds quickly?
If you’re already approved elsewhere, switching to a better-fit lender can still happen within 24–72 hours, depending on docs and product and the lender’s niche.
Are short-term lenders “bad”?
No. They solve urgent problems. For some it can work. The key is ensuring the total cost and repayment frequency won’t choke your cash flow—and that you didn’t miss a cheaper path. That said, I’ve seen many people who had taken this out, destroy their businesses in as fast a 1 month. Again, it can fix a current problem. But if not used carefully, and understood completely, can be a bad decision turning worst.
The Bottom Line
If you’ve been offered 1.4 over 6 months, you’re right to double-check. In many cases we can either lower the total cost, extend the term, change the repayment frequency, or move you from factor-rate to interest-rate—so your business gets funding without the unnecessary pain. Here are some examples to consider:
$50,000 over 6 months at 1.4 factor rate is $70,000 payable. It is also 80% pa simple rate.
$200,000 over 6 months at 1.4 factor rate is $280,000 payable.
Before you sign:
Send me your quote for a free, fast second opinion. No pressure, no jargon—just the clearest path to the best-value approval for your situation.
Important Information (Please Read): This article is general information, not personal advice. It does not consider your personal situation. Costs, approvals and timeframes vary by lender and applicant profile. Brand names such as Bizcap, TruCap, SkyeCap, Capify, BizFund, and AuzCap are mentioned solely to help readers understand the short-term business loan lenders category. Always read your contract and seek advice for your circumstances. If you take out a short term business loan, that’s fine, just ensure you have spoken with your legal professional/accountant/finance broker prior to signing.
Feel free to reach out to Michael today.
Call or text 0450 622 115
Email michael@caseyassetfinance.com.au
