Glossary · Pricing and math
Origination fee
An 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.
Also called underwriting fee, admin fee, processing fee
Funders call it an origination, underwriting or administrative fee. It is taken out of the advance before the money goes out, so it lowers net funding while the payback stays the same.
A fee raises the real cost of the advance. Two offers with the same factor and different fees are not the same price: compare the effective factor on net or an effective APR estimate.
Formula
fee $ = advance × fee % (or a flat amount)
Example
4% of a $50,000 advance is a $2,000 fee; the merchant receives $48,000.
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
- 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
- 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
- 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
- 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