Administrative Fee: Meaning in a Merchant Cash Advance
An administrative fee is a charge a funder lists for handling the paperwork and setup of a merchant cash advance. It's typically taken from the funding before the wire, and on some contracts it recurs for servicing the account.
What does administrative fee mean?
Contracts in this industry carry a handful of small named fees: administrative, processing, ACH setup and the like. They cover the funder's costs for setting up and running your account. The one-time kind comes out of your funding. The recurring kind, which is less common, gets charged along the way. Either way, it's part of what the advance really costs you.
Why does administrative fee matter to your business?
Fees like this are easy to skim past because each one looks small next to the advance amount. Add them up. The number that matters is what hits your bank account compared with what you'll pay back in total. When you compare offers, line up every fee, one time and recurring, next to each other. A recurring fee also matters if you plan to pay the advance off early, since it keeps coming until you do.
Is it one fee or several?
Some funders roll setup costs into one administrative fee. Others list three or four small ones separately. Neither is better on its own. Add up every fee taken at funding, compare that total across offers, and then check which fees recur during the life of the advance.
Where will you see it?
In the fee schedule or an addendum near the end of the contract. It often appears alongside the underwriting fee and a wire fee, and it's included in any state commercial financing disclosure you receive.
Which terms are related to administrative fee?
The full list is in the glossary. Owners ask about this in Is an MCA factor rate monthly or for the whole advance?.
A term on your offer you don't recognize?
Send us the line and we'll tell you what it means. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.