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Purchased amount versus amount funded
Two numbers on the first page, a third one that hits your account, and the arithmetic that tells you which offer is cheaper.
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 is the difference between the purchased amount and the amount funded on a merchant cash advance?
The amount funded (or purchase price) is what the funder pays you for your future receipts. The purchased amount is the larger figure the funder is entitled to collect. The difference between them is the stated cost of the advance. A third number matters just as much: the net wire, which is the amount funded minus any fees withheld at closing — that is the cash you can actually spend, and it is what you should divide the cost by.
The three numbers
Illustrative only — suppose the purchased amount is $67,500 and the purchase price is $50,000. The stated cost is $17,500. Now suppose $1,500 of fees are withheld at funding, so $48,500 arrives. You received $48,500 and you will deliver $67,500. Your real cost is $19,000, not $17,500, and the right denominator for any cost calculation is $48,500.
Reading the first page
These three figures are rarely labelled the way anyone says them out loud. On most sale-form paper the front page carries a small block of defined terms, and the words to look for are these.
Nothing on that page is required to say net wire, and on most agreements nothing does. It lives in a fee schedule, an addendum, or a separate disbursement authorisation, and sometimes only in the funding email. That is the number to insist on in writing, because it is the one you can spend and the only one nobody has to print.
Why the distinction matters when comparing offers
Two offers can quote the same funded amount and be materially different deals, because the purchased amount, the withheld fees and the expected duration all move independently. Comparing on the funded amount alone is comparing on the one number every offer will happily match.
Line up four figures for each offer instead:
- Cash actually wired to you.
- Total you will deliver, including every per-debit fee you will pay along the way.
- The remittance amount and frequency.
- The number of business days that implies.
The first two give you cost in dollars. The last two give you the time dimension the factor rate does not have, and the pressure the deal puts on weekly cash.
The specified percentage sits beside these, not among them
You will also see a percentage on the same page. That is the share of receipts the funder is entitled to, and in most deals it has already been converted into the fixed estimated remittance. It is not a fee and it is not a rate of interest. Do not add it to the cost. Do read it, because it is the number your reconciliation right is measured against.
The renewal, where the three numbers do the most damage
Most advances are refinanced before they finish, and the refinance is where the distinction between the three figures stops being an accounting point.
The renewal offer is a new purchase price of $70,000. The $27,000 balance is paid off out of it, so $43,000 is genuinely new money before any fee. The new purchased amount at a 1.35 is $94,500.
Line the whole thing up. You will have delivered $40,500 on the first deal plus $94,500 on the second: $135,000. You received $50,000 plus $43,000: $93,000. Cost across both: $42,000.
The reason is the payoff. The $27,000 you retired was purchased amount, not principal — it contained the entire remaining cost of the first advance, and nothing about settling it early reduced that. You paid the full price of money you held for part of a term, then bought more of it. This is what people mean by double-dipping, and it is not a hidden fee; it is the direct consequence of a total that does not amortise.
Before accepting any renewal, ask for two figures in dollars: the payoff amount today, and the net new cash after the payoff and after fees. Then ask whether an early payoff discount applies to the balance being retired. If the answer to the last one is no, the renewal is more expensive than it looks and waiting until the current deal finishes is worth pricing.
Where people get caught
The purchased amount does not amortise. There is no principal balance shrinking under an interest charge, so "how much is left" means "purchased amount minus what has been collected", full stop. Paying it down faster does not shrink it.
And the funded amount can quietly shrink between offer and closing. If underwriting reduces the advance but the fees were quoted as percentages, the net wire falls twice. Ask for the net wire figure in writing before you sign, as a dollar amount, not a formula.
And when someone asks what you owe, be precise about which figure you mean. A bookkeeper recording the $50,000 as a liability and the $17,500 as prepaid cost is describing a loan the contract says does not exist; a payoff quote from the funder is the outstanding purchased amount, which is a different number from either. Get the payoff in writing whenever it matters — for a renewal, a refinance, a sale of the business, or a second funder's due diligence — and date it, because it changes every day.
Where this applies
Related questions
What is the difference between the purchased amount and the amount funded on a merchant cash advance?
The **amount funded** (or purchase price) is what the funder pays you for your future receipts. The **purchased amount** is the larger figure the funder is entitled to collect. The difference between them is the stated cost of the advance. A third number matters just as much: the net wire, which is the amount funded minus any fees withheld at closing — that is the cash you can actually spend, and it is what you should divide the cost by.
Which funding products does this apply to?
Merchant Cash Advance. Each has its own page listing the funders in this directory that offer it and what each one publishes about its terms.
Are the figures here quotes?
No. Every worked example is labelled illustrative and exists to show the arithmetic. What a particular lender charges is on that lender's page, where it publishes it at all.
Who writes this?
The Find Me Funders research desk. Some drafting is AI-assisted, and every page that is says so at the top, including whether a person has checked its claims yet.
How do I know a figure here is right?
Where a page carries the green notice, its claims were checked against the sources listed at the end and a reviewer is named. Where it carries the amber one, nobody has verified it yet and you should confirm anything you plan to act on.
Are the examples real deals?
No. Every worked example is labelled illustrative and exists to show the arithmetic. What any particular lender charges is on that lender's page, where it publishes it.
Why do you never say what a typical rate is?
Because we cannot source it. A market average assembled from lenders who do not publish prices is a guess with a decimal point on it. Where a lender publishes a figure, we show that figure and say where it came from.
Is this financial or legal advice?
No. It is general information about how these products work. Outcomes depend on your contract and your state, and a lawyer or accountant licensed where you are is the person to ask about your situation.
Can I reuse this content?
Quote a paragraph with a link back. Do not republish whole articles.