APR measures the cost of credit as a yearly rate. Federal Regulation Z defines it as a rate that relates the amount and timing of the money you receive to the amount and timing of the payments you make. Fees charged as a condition of the credit count along with interest.
Federal Truth in Lending rules do not apply to credit extended mainly for business purposes, so no federal law makes a business lender quote an APR. Some states fill part of that gap: New York and California require an APR on many commercial financing offers, including merchant cash advances.
Example: $100,000 borrowed with $10,000 in charges looks like 10%. Repaid in 12 monthly payments of $9,166.67, it is an APR of about 18%, because you pay the money back throughout the year.
APR puts offers of different lengths on the same footing. A shorter deal with a smaller dollar cost can still carry the higher APR.
Sources
- 12 CFR 1026.22 Determination of annual percentage rate (Regulation Z) — Consumer Financial Protection Bureau (checked 2026-09-30)
- 12 CFR 1026.3 Exempt transactions (Regulation Z) — Consumer Financial Protection Bureau (checked 2026-09-30)
- 23 NYCRR Part 600: Commercial finance disclosure regulation (text) — New York State Department of Financial Services (checked 2026-09-30)
- DFPI's Commercial Financing Disclosure Regulations Approved to Become Effective as of December 9, 2022 — California Department of Financial Protection and Innovation (checked 2026-09-30)