In a merchant cash advance, the funder does not lend you money. It buys part of your future sales, and the purchase price is what it pays for them. Most people call this the advance or the funded amount.
The purchase price is not always what lands in your account. Some funders deduct origination, underwriting or other fees, and a renewal can deduct the balance still owed on your current advance. The FTC has sued a funder over contracts that showed an amount without the fees it later took out, so ask for the net funding figure in writing before you sign.
Example: A funder pays a $50,000 purchase price for $67,500 of your future receivables. With a $1,500 origination fee deducted, $48,500 reaches your account, and you still deliver the full $67,500.
The purchase price is also the base for the factor rate: purchase price times factor rate equals the purchased amount.
Sources
- FTC Alleges Merchant Cash Advance Provider Overcharged Small Businesses Millions (Aug. 3, 2020) — Federal Trade Commission (checked 2026-09-30)