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Renewal
Also called re-up, renewal advance, add-on, refunding.
New funding from the same funder while an existing advance is still outstanding, where the remaining balance is netted out of the new purchase price rather than separately repaid.
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
Eligibility is usually expressed as a percentage of the original purchased amount having been collected. Once the threshold is crossed, the funder will offer to renew, and in most shops it will keep offering.
The mechanics: a new, larger purchase price is set. The remaining purchased amount from the existing advance is deducted from it. Fees are deducted. What is left is net new cash. The business now owes the new purchased amount, calculated by applying the new factor rate to the whole new purchase price - including the portion that simply retired the old balance.
That is double-dipping, and on serial renewals it compounds. Each renewal applies a fresh factor rate to a balance that already contained a full factor-rate cost, so a business that renews four times can pay cost on the same original dollars four times over while receiving progressively less new money each round.
Funders push renewals hard because the economics are strong and the merchant is already underwritten. Brokers push them because renewals pay commission. Neither of those makes a renewal wrong - it is often the only capital available - but it does explain the volume of the calls.
Where this one catches people
Ask for two numbers before renewing: the net new cash you will receive, and the increase in total dollars owed. The gap between them is what the renewal costs. A renewal delivering $22,000 of new money while raising the total obligation by $48,000 is not a $22,000 advance at any rate anyone would quote out loud.
Worked through
Illustration. Original advance: $60,000 purchase price at 1.35, purchased amount $81,000. After collecting $50,000, the remaining balance is $31,000.
Renewal: new purchase price $90,000 at 1.38, new purchased amount $124,200. From the $90,000, the $31,000 balance is retired and $3,600 of fees deducted, so $55,400 of new cash reaches the business.
Total owed goes from $31,000 to $124,200 - up $93,200 - in exchange for $55,400. A factor rate of 1.38 was applied to the $31,000 that was purely a payoff, adding roughly $11,800 of cost on money the business never saw twice.
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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Renewal — common questions
What does renewal mean?
New funding from the same funder while an existing advance is still outstanding, where the remaining balance is netted out of the new purchase price rather than separately repaid.
Where does renewal catch people out?
Ask for two numbers before renewing: the net new cash you will receive, and the increase in total dollars owed. The gap between them is what the renewal costs. A renewal delivering $22,000 of new money while raising the total obligation by $48,000 is not a $22,000 advance at any rate anyone would quote out loud.
Is renewal the same as an interest rate?
Renewal 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 renewal apply to?
Merchant Cash Advance, Working Capital, Revenue-Based Financing.
Is there a worked example of renewal?
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 renewal?
Double dipping, Net funding, Payoff quote, Purchase price, Purchased amount.
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.