Glossary · Pricing and math
Net funding
Net funding is the cash a merchant actually receives: the advance minus origination and other fees and minus any payoffs of existing advances.
Also called net to merchant, net proceeds, disbursed amount
Merchants care about net funding, because that is the money they can spend. Disclosure laws in several states require the provider to show the amount disbursed alongside the total repayment, so getting it right matters.
Comparing offers on advance amount alone is misleading. An offer with a higher advance but a bigger fee or a forced payoff can put less cash in hand. Compare net funding, payment and total cost side by side.
Formula
net funding = advance − origination fee − other fees − payoffs effective factor on net = payback ÷ net funding
Example
$50,000 advance − $2,000 fee = $48,000 net. Payback $67,500 ÷ $48,000 = an effective factor of 1.406.
Track it on every deal
Statements, offers, positions and commissions with the math worked out, in one CRM for lending companies.
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
- GlossaryAdvance amountThe advance amount is the gross purchase price a funder pays for a merchant's receivables, before fees and payoffs are taken out.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
- GlossaryConsolidationAn MCA consolidation is a new advance that pays off one or more existing advances at funding, so the merchant ends up with fewer debits and, ideally, a lower total payment.Read
- GlossaryEffective APR (estimate)An effective APR estimate annualizes an MCA's cost from its payment schedule so it can be compared with loans. It is an estimate, not a disclosure figure.Read