Merchant Cash Advance funding uses factor rates which are different than APR or conventional interest rates. Many business owners I speak with sometimes equate the two together but that doesn't reflect that actual cost of capital paid. When Alternative lenders offer funding to a business they are purchasing future revenue at a discount in exchange for cash now.
For example, a business owner with $100k in monthly revenue can receive between $75k - $250k in unsecured, immediate cash by monetizing those future revenues. The program is simple because the principal & "interest" in this scenario are both combined into one weekly payment for as many weeks as it takes to reach the payback amount or, in other words, the original purchased amount of revenue.
In this case it's relatively easy to calculate your actual cost of capital which is: Payback amount minus your net proceeds. A comparable term loan for the same amount would be much longer term (5-10 years compared to 1-2 year for a Cash Advance) however the actual payoff amount will be much greater. That is, the cost of capital for a term loan is HIGHER than for a cash advance even though the "rate" is lower.
This is why staying focused on the rate simply doesn't tell you what your working capital actually costs. Cash advances cost less in absolute terms but, because the payback times are much shorter they seem more expensive. Think about the difference between a 12yr and a 30yr mortgage. The longer term one will have a much lower payment but the actual payback amount is much, much higher.
As a business owner the question you need to answer for yourself when seeking optimal funding is this: "What is my actual cost to use these funds and for how long will I use them?"