Funder: Meaning in a Merchant Cash Advance
A funder is the company that provides the money in a merchant cash advance by buying a share of a business's future receivables. It signs the contract with the business, sets the terms and collects the payments.
What does funder mean?
The funder is the other party on your contract. It decides whether to approve the file, how much to offer, the factor rate and the payment. After funding, it collects the daily or weekly remittance, handles reconciliation requests and issues the payoff letter. Some funders use their own capital, and others pool investors' money for each deal.
Why does funder matter to your business?
Funders differ a great deal in what they accept, how they price and how they treat businesses that hit a slow patch. Two offers with similar numbers can come from funders with very different reputations for reconciliation and collections. Knowing who the funder is, and how it behaves, is as important as the rate.
What should you ask about a funder?
- Is this the company that signs the contract and collects payments?
- Does it offer reconciliation, and how do I request it?
- Who do I call if I need a payment change?
How does a broker fit in?
A broker like us doesn't fund. We send your file to funders whose programs fit, show you each offer and help you compare them. The funder pays our commission when a deal funds.
Where will you see it?
In the first paragraph of the merchant agreement, by legal name. On the UCC-1 filing, as the secured party or through an agent. On your bank statement, as the name on the daily debit.
Which terms are related to 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.