---
title: "Interest-rate markups"
description: "Interest-rate markups are the spreads Fincanva adds above a reference rate to model borrowing costs for leverage and for shorting inside a backtest."
canonical_url: "https://fincanva.com/glossary/interest-rate-markups"
last_updated: "2026-09-24"
md_url: "https://fincanva.com/glossary/interest-rate-markups.md"
---

# Interest-rate markups

Interest-rate markups are the spreads Fincanva adds on top of a reference rate to model what financing would cost inside a [backtest](/glossary/backtest). Borrowing money to use [leverage](/glossary/leverage), or borrowing shares to sell short, is not free in real markets — a broker charges a rate above the market reference rate — and the markups let the simulation reflect that cost. There are two: a **borrowing rate markup** for leverage and a **short rate markup** for shorting.

**Also seen as:** financing spread, short borrow fee

## How is the financing rate calculated?

The financing rate the simulation charges is the reference rate plus the relevant markup.

$$ \text{Financing rate} = \text{Reference rate} + \text{Markup} $$

where the reference rate is the market rate the model starts from — the [margin-loan rate series](/glossary/special-data-series) — and the markup is the spread added on top. The borrowing markup applies to capital borrowed for leverage; the short markup applies to the cost of borrowing securities to short.

## How does Fincanva handle it?

- Two markups are modelled: a "Borrowing rate markup" (default 1.5%), described in the app as the "Spread added above the broker rate when borrowing capital", and a "Short rate markup" (default 2%), the "Spread added above the broker rate when shorting securities".
- Both are spreads over a reference rate, not the full rate themselves: with costs on, borrowing and shorting always pay the reference rate plus the markup.
- The "Borrowing rate markup" also reduces what idle cash earns: it is subtracted from the reference rate before idle cash is credited — see [interest received and paid](/glossary/interest-received-and-paid).
- They are applied only when costs are switched on; with costs off, modelled financing costs are zero.
- The resulting financing cost appears in the interest line of your capital and profit-and-loss breakdown.

## What does it look like in practice?

A [strategy](/glossary/strategy) runs a month with **leverage**, holding more exposure than its cash by borrowing capital. For that month the simulation charges interest on the borrowed portion at the reference rate **plus the 1.5% borrowing markup**, so the financing cost is higher than the reference rate alone. That charge shows up in the interest line of the [profit-and-loss breakdown](/glossary/p-l-breakdown) as a drag on the month's result — the price, in the model, of carrying leverage. A short position would be charged the reference rate plus the 2% short markup in the same way.

*The markups are modelling assumptions applied to historical results, not the rate a broker will charge you, and nothing here is a suggestion to use leverage or to short.*

Fincanva is for education and illustration only. It is not personalised financial advice, and past or simulated results do not predict future ones. [Read the Terms Addendum](https://fincanva.com/terms/addendum#section-3)