Thanks Finance1, this is very helpful. The math for the Add on explanation makes perfect sense, however I am still confused on how you went from a 1.2 factor rate to a 1.4 factor rate.

Also, I don’t understand why company B would buy a refi deal from me, when they would only make money for the 5K? My understanding, from your example, is that Company B would pay back the 5K that is still owned by merchant to Company A and set up a brand new deal with the merchant. Based on my math, why would company B purchase this risky deal when they barely make 1K (5K at 1.2 factor rate)?