MCA glossary: merchant cash advance terms every broker should know

Funding terms

• Merchant cash advance (MCA): a purchase of a business's future receivables for a lump sum today. It is not a loan in most structures.
• Factor rate: the number the advance is multiplied by to get the total payback, for example 1.3 on a set amount.
• Payback amount: the total the merchant delivers back, which is the advance times the factor rate.
• Holdback or remittance: the share of daily or weekly receipts, or a fixed debit, that goes toward the payback.
• Daily or weekly ACH: a fixed debit from the business bank account on a set schedule.
• Term: the expected time to deliver the payback, usually months.
• Position: the order of an advance when a merchant has more than one. First position is the first advance; second position comes after it.
• Stacking: taking a new advance while another is still open.
• Renewal: a new advance to an existing merchant, often once part of the first one is paid down.
• Reconciliation: adjusting remittances to match actual receipts when sales drop, under the contract's terms.
• Funder: the company that provides the capital and makes the funding decision.
• Commission or points: what the broker earns on a funded deal, set by the funder.

Broker and sales terms

• ISO (independent sales organization): a company that sources deals and submits them to funders, often with a team of reps.
• Broker: a person or shop that connects merchants with funders.
• Submission: a complete file sent to a funder for review.
• Offer: a funder's terms for a deal after review.
• Funded deal: an offer accepted and paid out.
• Funded rate: funded deals divided by leads worked.

Underwriting terms

• Bank statements: usually three to four months of business statements. The main document in most MCA files.
• Average daily balance: the typical amount in the account at the end of each day.
• Negative days: days the account ends below zero. Funders watch these closely.
• NSF: non sufficient funds; a payment returned because the account was short.
• Monthly deposits or revenue: the money coming into the business account each month.
• Time in business: how long the business has operated.
• High risk or restricted industry: industries a funder will not work, or works only on special terms.

Lead buying terms

• Lead: a merchant who asked about funding and agreed to be contacted.
• Live or real time lead: a lead delivered within moments of the merchant asking.
• Aged lead: an older lead, sold at a lower price. On BrokerSeat, leads from day 7 to 30 sit in the Aged Feed, 3 leads for 1 credit.
• Buy box: the filters that describe the deals you want: revenue, time in business, industry, state and amount.
• Credits: BrokerSeat's currency. Your monthly plan becomes credits, and you spend credits to unlock leads.
• Unlock: paying credits to see a lead's full contact details.
• Webhook: an automatic message that sends a lead from one system to another, like straight into your CRM.
• Speed to lead: the time between a lead arriving and your first call.
• Contact rate: the share of leads you actually reach.
• Return: sending back a clearly bad lead for credits under the provider's policy.
• Consent: the merchant's agreement to be contacted about funding.
• DNC (do not call): a request or list that means you must not call that number.

Keep learning

Put these terms to work in the how to buy MCA leads guide and the conversion playbook, or browse the BrokerSeat blog.