Glossary · Pricing and math
Advance amount
The advance amount is the gross purchase price a funder pays for a merchant's receivables, before fees and payoffs are taken out.
Also called funded amount, purchase price, gross advance
The advance amount is the headline number on an offer and the base for the payback: advance times factor rate. It is not what the merchant receives. Fees and payoffs come out first, leaving the net funding.
Funders often cap the advance as a multiple of monthly true revenue (for example 1 to 1.5 times) and by program. A request far above that ratio is a common reason a deal comes back smaller than asked.
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Related
- FeatureOffer calculator and comparisonEnter advance, factor, buy rate, fees and frequency and get payback, net funding, payment, term, holdback and your commission. Compare every lender's offer side by side.Read
- Free toolMCA factor rate calculatorFree merchant cash advance calculator. Enter the advance, factor rate, fee and term to get payback, daily or weekly payment, cost of capital and an APR estimate.Read
- GlossaryNet fundingNet funding is the cash a merchant actually receives: the advance minus origination and other fees and minus any payoffs of existing advances.Read
- GlossaryFactor rateThe multiplier that sets what a merchant repays on a cash advance: advance amount times factor rate equals the total payback, usually 1.10 to 1.55.Read
- GlossaryOrigination feeAn origination fee is a charge the funder deducts from the advance at funding, usually a percent of the advance (often 2 to 5%) or a flat amount.Read
- GlossaryRTR (right to receive)RTR is the total amount of future receivables a funder buys in a merchant cash advance: the advance times the factor rate, also called the payback.Read