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Funding amount
Also called purchase price, gross funded amount, advance amount.
The gross figure the agreement is written on, before fees, payoffs and reserves are deducted from the wire.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
What it means
In a purchase agreement the funding amount is the purchase price paid for a stated amount of future receivables. In a loan it is the principal. Either way it is the number the pricing is applied to, and it is not the number that reaches the bank.
Deductions at closing commonly include origination or program fees, the broker's psf, documentation and UCC filing charges, any pass-through taxes, and payoffs of existing positions the new funder is retiring.
What matters for judging a deal is the pair of numbers at each end: net cash received, and total to be repaid. Everything in between is structure.
Where this one catches people
Two offers with an identical funding amount and an identical factor rate can deliver materially different cash. Every dollar deducted from proceeds is a dollar you pay full cost on and never touch, and the deductions are set out on a closing statement you see at the end rather than in the term sheet you compared. Ask for the net wire figure before signing, not after.
Worked through
A $75,000 funding amount at a 1.35 factor rate means $101,250 to remit. Deduct a $2,250 origination fee and a $22,000 payoff of a prior advance and $50,750 lands in the account. The cost of $26,250 is being paid on $50,750 of usable cash, which is a very different deal from the one the quoted rate describes.
Figures in the example are illustrative. They show the arithmetic, not a quote — what any one lender would charge is on that lender's page, where it is published at all.
Where you will meet this term
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Funding amount — common questions
What does funding amount mean?
The gross figure the agreement is written on, before fees, payoffs and reserves are deducted from the wire.
Where does funding amount catch people out?
Two offers with an identical funding amount and an identical factor rate can deliver materially different cash. Every dollar deducted from proceeds is a dollar you pay full cost on and never touch, and the deductions are set out on a closing statement you see at the end rather than in the term sheet you compared. Ask for the net wire figure before signing, not after.
Is funding amount the same as an interest rate?
Funding amount is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does funding amount apply to?
Merchant Cash Advance, Working Capital, Term Loan, Revenue-Based Financing.
Is there a worked example of funding amount?
Yes, on this page, and it is labelled illustrative. It shows the arithmetic, not a quote from any lender.
What else should I read alongside funding amount?
Disbursement, Double dipping, Funding statement, Net funding, Origination fee.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.