Net Funding: Meaning in a Merchant Cash Advance
Net funding is the cash that actually lands in your account after fees are taken out and any old balance is paid off. It's the number to compare offers on. Two offers with the same advance amount can have very different net funding, and the cost of the advance is charged on the full amount, not the net.
Where does it show up?
On state disclosure forms as the disbursement amount. On other offers, look for net to merchant, net funds or amount funded, and check what came out.
How do you work out net funding?
Start with the funded amount on the offer and subtract every fee taken at funding, plus any balance paid off from the proceeds. What's left is what lands in your account. Ask for that figure in writing next to the total payback.
What does it look like in practice?
Advance $40,000. Fee $1,200. Payoff of an old balance $8,000. Net funding $30,800. If the payback is $54,000, the cost of $15,200, the fee plus the $1,200 charge, works out to about $0.49 per net new dollar, not the $0.35 the factor suggests. The renewal calculator shows this.
Which owner question goes with this term?
What fees can come with an MCA? Answers to the questions owners ask about this term, with what to ask the funder.
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.