A factor rate is typically used for merchant cash advances and short-term business loans to determine how much you will owe in interest. Instead of a percentage, like with APRs, the interest rate for invoice factoring is expressed in decimal form. Your factor rate is determined by the industry your business is in, how long you’ve been in business, the stability of your business and your monthly credit card payment revenue. With factor rates, you generally pay more in interest than with loans that use APRs.