Direct Funder: Meaning in a Merchant Cash Advance
A direct funder is a merchant cash advance company that uses its own capital to buy receivables and makes its own underwriting decisions, rather than passing files to other companies. It signs and services the contract itself.
What does direct funder mean?
Some companies that call themselves funders are really brokers, sending each file to a real funder behind the scenes. A direct funder is the one actually writing the check. It keeps the file in-house from underwriting through collections, though it sometimes sells parts of deals to investors through syndication.
Why does direct funder matter to your business?
Dealing with a direct funder means one company decides and one company services the advance. That can make communication simpler. It doesn't guarantee a better price, though. A direct funder only offers its own programs, so it can't tell you whether another funder would pay more for the same file. That comparison is what a broker adds.
How can you tell a direct funder?
- The contract names the company you've been dealing with, not a different entity.
- The same company appears on the UCC filing and the bank debit.
- It can explain its own underwriting rules without "checking with a partner."
Can a deal be direct and brokered together?
Many owners get the best result by comparing a direct funder's offer against offers a broker brings in. Seeing several side by side is the simplest way to know a price is fair.
Why is the label used loosely?
Plenty of brokers call themselves direct to sound closer to the money. Ask directly whose name will be on the contract.
Where will you see it?
In a company's own marketing. In the merchant agreement, where the funder's name should match the company you spoke to. In broker conversations about which funders are direct.
Which terms are related to direct funder?
The full list is in the glossary. Owners ask about this in Who is the actual funder on my MCA offer?.
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.