The MCA Glossary: Merchant Cash Advance Terms Every Broker Should Know

The purchase of a business's future revenue at a discount. The funder advances a lump sum today and collects a fixed total back from the merchant's future sales. Because it's a sale of receivables — not a loan of money — an MCA has no interest rate, no fixed term, and no APR in the traditional sense.

A loan lends money at an interest rate over a set term; an MCA buys future receivables at a fixed payback. That legal distinction is why MCAs are priced with a factor rate instead of interest, and why repayment flexes with sales rather than following a fixed amortization schedule.

The lump sum the funder pays the merchant up front — the 'cash' in cash advance. It's typically sized as a fraction of the merchant's monthly revenue, often roughly one month's gross or less depending on the funder's box.

The multiplier that sets the total payback. A $50,000 advance at a 1.4 factor rate means the merchant repays $70,000. Factor rates usually run from about 1.1 to 1.5; unlike interest, the cost is fixed regardless of how quickly the advance is repaid.

The total dollar amount the merchant owes back: advance amount × factor rate. RTR — 'Right to Receivables' or 'Right to Receive' — is the funder's claim on that full payback. A $50,000 advance at 1.4 has an RTR of $70,000.

The factor rate the funder offers the broker, before the broker's markup. If the funder's buy rate is 1.3 and the broker sells the deal to the merchant at 1.4, the spread between those two numbers is the broker's commission, paid as points.

Points are how broker commission is quoted — each point is one percent of the funded amount. A broker who funds a $50,000 deal at 10 points earns $5,000. Commission comes from the spread between the buy rate and the rate the merchant accepts, plus any points the funder pays on top.

Re-funding an existing merchant before or after they've paid off their current advance. Renewals are the most profitable deals in MCA — the merchant is already known, already paying, and already trusts the broker — which is why funders chase them hard.

How long the merchant has been operating, usually measured from the business's start date. Most funders want a minimum — commonly six months to a year — because longer-running businesses default less often.

The merchant's gross monthly deposits, read off their bank statements. It's the single biggest factor in sizing an advance, since the funder is buying a slice of those future deposits.

Usually the merchant's last three to six months of business bank statements. They're the core underwriting document — funders read them for revenue, daily balances, existing advances, and red flags like NSFs and negative days.

A bounced or returned transaction caused by too little money in the account. Frequent NSFs on a merchant's statements signal cash-flow stress and make a decline — or a smaller, pricier offer — far more likely.

When a merchant takes on multiple cash advances at the same time, each pulling its own daily or weekly payment. Stacking strains cash flow and raises default risk, so many funders won't fund a merchant who's already stacked — and statements are scanned closely for signs of it.

When a merchant stops making their agreed payments and the advance goes unpaid. Defaults are the funder's core risk, which is why underwriting leans so heavily on revenue consistency, time in business, and NSF history.

The fixed percentage of the merchant's daily or weekly revenue the funder collects until the RTR is fully repaid. A 12% holdback on $1,000 of daily sales pulls $120 a day. Holdback sets the pace of repayment; the factor rate sets the total.

Automated Clearing House — the bank-to-bank network used to pull payments directly from the merchant's account. Most modern MCAs collect via fixed daily or weekly ACH debits rather than a true percentage-of-sales split.

The cadence of repayment. Daily remittance pulls a set amount every business day; weekly pulls once a week. The schedule is fixed at funding and sized so the full RTR is collected over the expected term.

A debt-relief structure where a new funder advances money used to pay down a merchant's existing advances, then collects a single, lower combined payment. It's used to rescue over-stacked merchants — and it's a distinct product from a standard MCA.

A signed document in which the merchant pre-admits liability if they default, letting the funder obtain a judgment quickly without a full lawsuit. COJs have been restricted or banned in some jurisdictions, so their use varies by state.

The body of law governing secured commercial transactions. Funders file a UCC lien to publicly stake a claim on a merchant's assets or receivables. Those filings are public — which is why UCC records are also a widely scraped lead source in MCA.

A prospective merchant's contact data — typically a business name, contact name, and email or phone. A raw lead is just potential; it isn't revenue until it's marketed, engaged, and converted into an application.

A completed funding application, ideally with bank statements attached. The 'app-in' is the milestone that actually matters in marketing — it's a fundable deal, not a click, a reply, or an open.

A merchant's application package — application plus bank statements — sent to a funder or lender for an offer. In a healthy shop, submissions are the real output of all the marketing that comes before them.

Leads you re-market to over time rather than contact once. Past applicants, declines, and old lists already know your brand, which is why re-marketed leads typically convert better than fresh, cold data.

The share of sent emails that land in the primary inbox rather than spam or the promotions tab. It's the metric that decides whether a list is worth anything — a merchant who never sees your email is a merchant you never reached. MCA Rocket guarantees a 90%+ inbox rate.

The process of building a domain and inbox's sending reputation over time by emulating real, positive engagement before any cold campaign runs. Skipping the warm-up is the fastest way to land in spam and burn a domain.

A lookalike sending domain used for cold outreach instead of the primary operational one — for example, getyourbrand.net beside yourbrand.com. The point is protection: if a cousin domain gets blacklisted, the real business email keeps working.

Spreading a campaign across many domains, IPs, and inboxes so no single sender exceeds a safe daily volume. A rule of thumb is 30–50 emails per inbox per day, which is why sending a thousand emails takes dozens of inboxes, never one.

The U.S. law governing commercial email — it requires a real physical address, a working opt-out, and honest headers. Compliance is non-negotiable for any legitimate cold-email program in MCA.

The party that supplies the capital and buys the merchant's receivables. In MCA the more accurate word is 'funder' — they're purchasing future revenue, not lending money — though 'lender' gets used interchangeably in everyday conversation.

The party that sources merchants, packages their applications, and submits them to funders for an offer. Brokers earn commission on funded deals and don't put up the capital themselves.

An independent shop that originates and submits deals to funders — essentially a broker operating under a formal relationship with one or more funders. 'ISO' and 'broker' are often used loosely, but ISO usually implies a more established sales operation with direct funder agreements.

When multiple parties pool capital to fund a single advance and share both the risk and the returns proportionally. Brokers and ISOs sometimes syndicate on their own deals — putting up part of the capital to earn a share of the payback alongside the funder.