Capital
The True Cost of Capital for Contractors
The cost of capital runs from nearly free to over 300% a year — and most contractors never see the real number, because it hides behind factor rates, discounts, and “no monthly payment.” Cheapest to most expensive: customer deposits and supplier early-pay discounts (near zero, or even a gain), then SBA and bank debt (6–12%), lines of credit (8–13%), equipment financing (6–14%), cards and online loans (18–45%), invoice factoring (typically ~24%, up to 60%+), merchant cash advances (40–350%+), and finally equity — which looks cheap because nothing is due monthly, but costs a permanent share of every dollar you earn from here on.
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