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Yield
Also called return, funder yield, annualised return.
The return a funder earns on capital deployed, expressed as a rate over time — which is why the same factor rate produces a very different result depending on how fast the money comes back.
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
Two figures drive it: how much comes back above what went out, and how long that takes. A fixed cost recovered quickly annualises far higher than the same fixed cost recovered slowly, because the capital is freed and redeployed sooner. This is the reason the fast end of the market prefers short terms and daily remittance, and the reason renewals matter so much to a funder's economics.
It also explains a structural feature that surprises merchants. Because the total repayment amount on an advance is fixed at signing and does not decline with time, early payoff does not reduce the funder's dollars — it compresses them into a shorter period, which raises the annualised yield. The funder's interest in early repayment and the merchant's are not opposed; they simply are not aligned in the way the merchant assumes.
On the investor side, syndicate participants and funds measure performance net of defaults, and headline yields on the paper are gross of loss rates that can be substantial. A portfolio yield and a deal yield are different numbers.
Where this one catches people
Merchants asking for an early payoff often expect a discount and are told the funder would rather they paid over the full term. The opposite is generally true: rapid repayment at full payback is the best outcome available to the funder. Where a prepayment discount does exist, it is a commercial concession offered to win the deal or preserve the relationship, not a reflection of interest that was never earned. Knowing which side wants what makes the conversation shorter.
Worked through
Illustrative only. $100,000 advanced, $130,000 returned — $30,000 of gross profit regardless of timing. Returned over 12 months, that is roughly a 30 percent simple annual return on the capital. Returned over 6 months, the same $30,000 was earned in half the time, so the capital can be deployed again and the annualised figure is roughly double. Same contract, same dollars from the merchant, twice the yield.
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.
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Yield — common questions
What does yield mean?
The return a funder earns on capital deployed, expressed as a rate over time — which is why the same factor rate produces a very different result depending on how fast the money comes back.
Where does yield catch people out?
Merchants asking for an early payoff often expect a discount and are told the funder would rather they paid over the full term. The opposite is generally true: rapid repayment at full payback is the best outcome available to the funder. Where a prepayment discount does exist, it is a commercial concession offered to win the deal or preserve the relationship, not a reflection of interest that was never earned. Knowing which side wants what makes the conversation shorter.
Is yield the same as an interest rate?
Yield 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 yield apply to?
Merchant Cash Advance, Working Capital, Revenue-Based Financing.
Is there a worked example of yield?
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 yield?
Annual percentage rate, Early payoff discount, Factor rate, Renewal, Syndication.
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.