Origination Fee
An upfront fee some funders deduct to set up an advance, which reduces the net amount you actually receive.
An origination fee (sometimes called a setup, administrative, or processing fee) is an upfront charge some funders apply to originate an advance. It is often deducted from the funded amount, so the cash that lands in your account is less than the headline number — a $20,000 approval with a $500 origination fee nets you $19,500, while repayment is still calculated on the gross.
The fee is separate from the factor rate, which is why the only fair way to compare offers is on the full picture: net cash received versus total payback, plus any fees. Two deals with the same factor rate can cost meaningfully different amounts once origination and other fees are included.
Ask for every fee in writing before you sign, and confirm whether each one is deducted from your disbursement or added to what you repay. A transparent offer states the funded amount, all fees, the total payback, and the remittance with no surprises at closing.
Frequently asked
Is an origination fee the same as interest?
No. It is a separate upfront charge to set up the advance, on top of the cost expressed by the factor rate. Include it when you compare total cost.
Does an origination fee reduce what I receive?
Usually, yes. When it is deducted from the disbursement, your net cash is lower than the approved amount even though repayment is still based on the gross funded amount.
How do I compare offers that have different fees?
Compare net cash received against total payback, including every fee. Two offers with the same factor rate can differ once origination and other fees are counted.
Related terms
The full dollar amount you repay over the life of an advance — funded amount times the factor rate, plus any fees.
A decimal multiplier (like 1.30) applied to the funded amount to calculate total payback — it is not an interest rate or APR.
The base factor rate an underwriting desk assigns to a deal before any broker markup — the wholesale cost of the advance.
A financing structure where a funder buys a set amount of your future sales at a discount today — a sale, not a loan.
A reduction in total payback that some funders offer if you repay your advance ahead of schedule.
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