The finance charge is the cost of financing in dollars. Regulation Z, the federal rule for consumer credit, counts interest, service charges, points, loan fees and similar charges. New York's commercial financing law uses the same idea for business deals: any charge you pay, directly or indirectly, as a condition of the financing.
For a merchant cash advance, the finance charge is the difference between the total you repay and the money you actually receive. Fees taken out of the funding count, even though you never write a separate check for them.
Example: A $50,000 advance at a 1.35 factor rate with a $1,500 origination fee deducted: you receive $48,500 and repay $67,500, so the finance charge is $19,000.
Weigh the finance charge against the term. A smaller finance charge repaid over a short term can still be the more expensive offer.
Sources
- 12 CFR 1026.4 Finance charge (Regulation Z) — Consumer Financial Protection Bureau (checked 2026-09-30)
- N.Y. Financial Services Law § 801. Definitions — New York State Senate (checked 2026-09-30)