Find Me Funders
Purchase price
Also called advance amount, funded amount, purchase amount.
What the funder pays for the receipts it is buying - the gross contract figure before fees and payoffs, which is not the amount that reaches the bank account.
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
It is the anchor number in an advance. The purchased amount is derived from it by multiplying by the factor rate, so an increase in purchase price raises the obligation proportionally. Fees are deducted from it. Payoffs of prior positions come out of it. What is left is net funding.
The distinction matters because cost is computed on the gross. Suppose a business receives $61,000 after fees and a payoff, from a $100,000 purchase price at a 1.35 factor: it owes $135,000. The $35,000 of cost was calculated on money that included the fees and the payoff, not on the $61,000 it can actually use. Those figures are illustrative, but the relationship holds at any rate.
On a renewal, the purchase price is typically set at a level that both retires the outstanding balance and delivers some new cash, which is why renewal purchase prices climb even when the new money does not.
Where this one catches people
Purchase price is the number in the contract; net funding is the number in your account. Everything is priced off the first and nothing you can spend comes from it. When comparing offers, put net funding beside purchased amount and ignore both the purchase price and the factor rate.
Worked through
Illustration. Purchase price $120,000, factor rate 1.32, purchased amount $158,400. Deducted at funding: $4,800 origination, $150 ACH, and $46,000 to retire an existing position.
Net funding is $69,050. Cost of $38,400 was charged on $120,000. Measured against usable new cash, the business paid $38,400 to obtain $69,050 - and part of the $46,000 payoff was itself a fixed cost already fully incurred on the earlier advance.
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
Read next
Purchase price — common questions
What does purchase price mean?
What the funder pays for the receipts it is buying - the gross contract figure before fees and payoffs, which is not the amount that reaches the bank account.
Where does purchase price catch people out?
Purchase price is the number in the contract; net funding is the number in your account. Everything is priced off the first and nothing you can spend comes from it. When comparing offers, put net funding beside purchased amount and ignore both the purchase price and the factor rate.
Is purchase price the same as an interest rate?
Purchase price 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 purchase price apply to?
Merchant Cash Advance, Revenue-Based Financing.
Is there a worked example of purchase price?
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 purchase price?
Double dipping, Factor rate, Net funding, Origination fee, 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.