The fees nobody quotes in the funding email
When you sign an MCA term sheet, the headline number is almost always the factor rate. A 1.30 factor on $50,000 means you repay $65,000 — that number is honest, comparable, and shows up in every quote. But the contract you sign at funding has at least six more line items that change what you actually receive and what you actually pay. Most of them are not negotiable after signing.
This guide unpacks the entire fee stack — origination, underwriting/processing, ACH setup, wire-out, NSF, modification, confession-of-judgment filing, renewal, and the broker markup — and shows you how the top funders in 2026 structure each one. The goal: when you sit down with a term sheet, you should be able to look at the contract and immediately spot which lines are negotiable, which are standard, and which are a red flag.
The eight fees in almost every MCA contract
Here's the typical fee stack for a 2026 MCA, in the order they hit:
- Origination fee — 1.99%–3.99% of funded amount, deducted at funding
- Underwriting / processing fee — flat $195–$595, deducted at funding
- Wire / ACH fee — $25–$75 to send the funded amount to your account
- NSF fee — $25–$50 per bounced daily ACH withdrawal
- Modification fee — $250–$2,500 if you request a reconciliation or term change
- Confession-of-judgment filing fee — $1,000–$5,000 (or actual cost) if you default and the funder files the COJ
- Default / acceleration fee — 10–25% of the unpaid balance triggered by default
- Renewal / re-funding fee — often waived for in-house renewals, but sometimes a $300–$995 line item
And — separately from the funder's fee schedule — many ISOs and broker shops add a broker fee or markup (1%–7% of funded amount) on top, either disclosed or hidden in the factor rate.
Origination fee — what each funder charges
The origination fee is the single largest fee at closing. It's almost always a percentage of the gross funded amount, deducted from the wire. A 3% origination on $50,000 means $1,500 disappears before the money lands in your account — but your payback is still $50,000 × the factor rate.
Typical ranges in 2026 by funder tier:
- Bank-backed funders (Live Oak, Newtek, BHG, Pursuit Lending): 1.99%–2.49% — these run lean on origination because they pull most of their margin from the spread above their cost of capital
- Established independent MCAs (Credibly, CFG Merchant Solutions, Rapid Finance, Forward Financing): 2.49%–3.49% — middle of the market
- Aggressive paper-grade-C shops (some Accord, Greenbox, Yellowstone-era successors): 3.49%–3.99% (and occasionally higher) — they price for higher default tolerance and shorter-tenured merchants
- Vertical-specialty funders (Toast Capital, Square Capital, Clover Capital): usually NO separate origination fee — but the factor rate already bakes in their cost of acquisition and underwriting
Negotiating tip: origination is almost always the most negotiable fee in the contract. Brokers regularly get it reduced from 2.99% to 1.99% on competitive deals (B paper and above with multiple offers in play). If you're at 3.99% with one offer in hand, get a second quote from a competing funder — your origination usually drops 50–100 bps.
Underwriting and processing — the flat fees
Most funders also charge a flat underwriting or processing fee — typically $195–$595, deducted at funding. Some funders fold it into the origination percentage; most charge it separately. The fee usually covers:
- Bank statement aggregation and parsing (Plaid or Decision Logic)
- Credit pull (business and personal)
- UCC search and lien check
- OFAC / fraud screening
- Document prep and e-signature platform
On a $50,000 advance, a $395 processing fee is about 0.8% of funded amount — small relative to origination, but real. A few funders advertise "no processing fee" and quietly raise their origination by 50 bps to absorb the cost. Read the term sheet line-by-line.
Wire-out and ACH setup fees
Some funders charge $25–$75 to wire your funded amount; others use free ACH. This is almost universally a real third-party bank cost (Wells Fargo charges the funder ~$15 for an outbound wire) marked up modestly. Not negotiable in most cases, but small enough not to fight over.
Watch out for: "expedited funding" fees of $250–$500 for same-day funding. Some funders use this as a profit center. If you don't truly need money today, take next-day funding and save the fee.
NSF fees — the daily ACH penalty
This is where the fee schedule starts to bite. Every funder charges an NSF (non-sufficient funds) fee when a daily ACH bounces — typically $25–$50 per occurrence. On a 12-month daily-ACH term that's 252 business days; if your account is tight and you bounce twice a week for two months, that's 16 NSFs × $35 = $560 in fees alone, plus your bank's own NSF charge (usually $35) on top of that.
Most funders cap NSF tolerance at 3–5 NSFs before triggering default. CFG, Credibly, and Forward Financing are documented as more lenient; some aggressive funders trigger default at 2 NSFs in a 30-day window.
Modification fees — the cost of asking for help
If your revenue drops and you need to request reconciliation (lower daily payment) or a term modification (extending the term to reduce daily ACH), most funders charge a modification fee of $250–$2,500. Some bake it into the new factor rate instead of charging it upfront.
A few funders — notably CFG Merchant Solutions and Forward Financing — have published policies of waiving modification fees for first-time requests with documented hardship. Most don't. Always ask: "Is there a modification fee if my revenue drops 20%?" before signing.
Confession-of-judgment filing fee
A confession of judgment (COJ) is a pre-signed legal document letting the funder enter judgment against you in court without a trial if you default. Banned in New York since 2019 for out-of-state plaintiffs; still enforceable in most other states. When a funder files a COJ against a defaulted merchant, the contract typically passes through the actual court filing cost ($1,000–$5,000 depending on jurisdiction) plus an internal processing markup.
If you sign a contract with a COJ clause, ask whether the filing fee is capped or uncapped. Some contracts let the funder add "actual costs" with no ceiling — a $3,000 filing fee can become $8,000 with attorney prep time added.
Default acceleration fee — the biggest hidden number
This is the fee that turns a manageable $20,000 unpaid balance into a $35,000 lawsuit. The default acceleration clause typically lets the funder add 10%–25% of the unpaid balance as a penalty the moment default triggers. Combined with the attorneys' fees clause (most contracts: 15%–25% of recovered amount) and the COJ filing fee, default economics get ugly fast.
Example: $20,000 unpaid balance at default.
- Default acceleration fee: 15% × $20,000 = $3,000
- Attorneys' fees: 20% × $20,000 = $4,000
- COJ filing fee: $2,500
- NSF fees that triggered default: 5 × $35 = $175
- Total collected amount: ~$29,675 on $20,000 of original principal owed
This is why the default fee schedule matters even when you don't think you'll default. The first time a contract becomes truly painful is when one revenue-bad month tips you over.
Renewal fees — usually waived, sometimes not
Most funders waive renewal fees for existing merchants because re-funding is their highest-margin business (the merchant is already approved, no marketing cost, lower default risk on second cycle). About 80% of funders we track waive origination on renewals. The other 20% charge a reduced renewal fee of $300–$995.
Ask before your first cycle: "If I renew with you at month 9, do you waive origination and processing on the new funding?" Most will say yes. Get it in writing.
Broker markup — the invisible line item
Here's the fee that doesn't appear on the term sheet but shows up in your factor rate. ISOs (Independent Sales Organizations) and brokers earn 6%–15% in commission from the funder for placing your deal. But the factor rate they quote you might be 5–20 bps higher than the funder's wholesale rate — that delta is the broker markup, and it goes straight to the broker.
On a $50,000 deal: wholesale factor 1.28 (broker earns 8% commission from funder = $4,000), retail factor quoted 1.32 (broker earns the spread of $2,000 on top). Total broker comp on that deal: $6,000. The merchant pays the difference through a higher payback.
California SB 1235, New York Commercial Financing Disclosure Law, Virginia HB 1027, and Utah HB 312 now require funders to disclose total cost of capital. The broker markup is getting harder to hide. Ask: "What's the funder's wholesale rate?" If the broker won't quote it, walk away — they're embedding a markup of 10%+ in the factor.
Fee comparison summary — funder tier averages 2026
Rough averages we see across ~100 active MCA funders in our funder reviews:
- Bank-backed (Live Oak, Newtek, BHG): 2.0% origination, $250 processing, no modification fee, COJ rarely filed
- Top independent (Credibly, CFG, Forward Financing, Rapid Finance): 2.99% origination, $395 processing, $500 modification fee, COJ filing pass-through
- Aggressive paper-grade-C shops: 3.99% origination, $595 processing, $1,500+ modification, 20% default acceleration, COJ aggressively enforced
- Vertical specialty (Toast, Square, Clover Capital): usually 0% origination line item, but rates baked into factor; no separate modification fee; no COJ
The five questions to ask before signing
- "What's the funder's wholesale rate, separate from your broker markup?" If they refuse to break it out, you're paying a markup.
- "What's the modification fee if I need reconciliation?" If the answer is "we don't allow modifications," walk away.
- "What's the NSF tolerance before default triggers?" 5+ is healthy. 2 is aggressive and dangerous.
- "What's the default acceleration percentage, and what attorney-fee clause am I agreeing to?" Get the actual percentages, not "industry standard."
- "Do you waive origination and processing on renewals?" Get it in writing in the term sheet, not just the email.
Frequently asked questions
- What fees actually come out of the funded amount at closing?
- Most MCA funders charge origination (1.99%–3.99%), underwriting/processing ($195–$595), wire fee ($25–$75), and sometimes ACH setup ($25–$50). On a $50,000 advance with a 2.99% origination and $295 processing fee, you net about $48,180 — but you still owe the full factored payback on the $50,000 gross.
- Why do brokers add fees on top of the funder's fees?
- ISO/broker shops earn 6–15% in points from the funder, but some also charge the merchant a separate broker fee (1%–7% of funded amount). That stack is legal in most states (NY, CA, VA, UT now require disclosure) but it's almost always negotiable. Ask: 'What's the funder's wholesale rate, and what's your markup?'
- Are fees taken from the funded amount or added to the payback?
- Almost always deducted from the wire at funding. You see a smaller deposit hit your bank account. The payback ($50,000 × 1.30 = $65,000) is still calculated on the gross — not the net. This effectively raises your APR-equivalent because you're paying interest on money you never received.
- What's the most expensive 'hidden' fee in an MCA contract?
- Default-related fees, by a wide margin. NSF fees ($25–$50 per failed ACH), default acceleration penalty (often 10–15% of unpaid balance), confession-of-judgment filing fees ($1,000–$5,000), and attorneys' fees clauses (15–25% of recovered amount) can compound a $20,000 unpaid balance into $35,000+ in collections.
- Do better funders have lower fees?
- Generally, yes. Bank-backed funders like Live Oak, Newtek, and BHG run lean fee schedules. Independent MCA shops on warehouse lines (Credibly, CFG, Rapid Finance) charge moderate fees. Aggressive paper-grade-C shops layer on the most fees because they're pricing for higher default risk and shorter merchant tenure.