Advance Rate
The percentage of eligible collateral a lender or factor will fund. Determines, more than headline pricing, how much working capital a facility actually delivers.
Typical ranges
Advance rates vary by asset class and risk profile. Eligible commercial receivables generally support 80 to 90 percent advance rates; medical receivables 70 to 85 percent; finished inventory 40 to 60 percent; equipment 50 to 80 percent of orderly liquidation value.
Concentration, payor mix, and historical dilution all push the advance rate up or down. Two facilities with identical headline pricing can deliver materially different working capital depending on advance rates.