MCA Glossary: Merchant Cash Advance and Lead Terms

MCA structure and pricing terms

These terms describe how a merchant cash advance is built, priced and collected. Start here if you are new to MCA.

Merchant cash advance (MCA)

A purchase of a business's future receivables at a discount. The funder pays cash up front and collects an agreed share of the business's incoming revenue until the purchased amount is delivered. It is structured as a sale, not a loan.

Receivables

Money a business will collect from future sales, such as card settlements and deposits. In an MCA, these future receivables are what the funder buys.

Purchase price

The cash the funder pays the merchant up front for the receivables, before any fees the contract allows.

Purchased amount (RTR)

The total receivables the merchant agrees to deliver to the funder, sometimes called the right to receive or payback amount. It equals the purchase price multiplied by the factor rate.

Factor rate

The multiplier that sets the purchased amount. Example math: a $50,000 purchase price at a 1.30 factor rate means $65,000 of receivables are purchased. It is not an interest rate.

Specified percentage

The share of the merchant's receivables the contract says goes to the funder until the purchased amount is delivered.

Holdback (retrieval rate)

The percentage of daily card sales or deposits withheld for the funder. Holdback and retrieval rate are common industry names for the specified percentage in practice.

ACH remittance

Collection by fixed daily or weekly debits from the merchant's bank account, set as an estimate of the specified percentage of receipts.

Split funding

Collection in which the card processor splits each settlement, sending the holdback to the funder and the rest to the merchant.

Lockbox

Collection in which receipts are deposited to a controlled account; the funder takes its share and releases the remainder to the merchant.

Reconciliation

A contract right letting the merchant ask for remittances to be adjusted to match actual receipts when sales fall. Courts often weigh reconciliation when deciding whether an MCA is a true purchase or a disguised loan.

True-up

The adjustment that settles the gap between what was remitted under estimated fixed debits and what the specified percentage of actual receipts would have produced. Usage varies by funder.

Sales-based financing

The term several state laws use for financing repaid as a share of a business's sales or income, a category that typically includes merchant cash advances.

Position, risk and legal terms

These terms cover how advances stack up, what happens when things go wrong and the state laws that apply. Legal definitions are general summaries as of 2026; confirm details with counsel.

Position

The order of a merchant's open advances. A merchant with no current advance is a first-position deal; one already remitting to a funder is second position for the next.

Stacking

Taking more than one advance at the same time from different funders. Each new advance sits in a later position.

Consolidation

A new advance used to pay off one or more existing advances, combining them into a single remittance.

Renewal

A new advance to a merchant who has paid down part or all of a previous one, often with the same funder.

Default

A breach of the MCA contract, such as blocking remittances, diverting receivables to another account or closing the business without notice. In a true sale structure, a drop in sales by itself is generally meant to be addressed through reconciliation rather than treated as default, though contract terms vary.

UCC-1 filing

A financing statement filed with a state to give public notice of a party's interest in a debtor's assets, such as receivables. Under UCC 9-515 it is generally effective for five years unless continued.

Confession of judgment (COJ)

A signed statement letting a creditor obtain a court judgment without a lawsuit if the signer defaults. Since August 30, 2019, New York has barred filing them against defendants who lived outside the state when they signed.

Commercial financing disclosure law

A state law requiring providers of certain business financing, including MCAs in many states, to give cost disclosures at the time of an offer. As of 2026, states with some form of these laws include California, New York, Utah, Virginia and Texas, among others.

Underwriting terms

Funders read bank statements more closely than credit reports. These are the numbers they look at.

Bank statement underwriting

Judging an MCA application mainly from recent business bank statements rather than tax returns or collateral. Deposits, balances and existing debits drive the decision.

Monthly revenue

Gross deposits or sales per month. It is the main driver of how large an advance a merchant can qualify for.

Average daily balance (ADB)

The average amount in the business account across the days in a statement period. A low ADB can signal tight cash flow.

NSF

Non-sufficient funds: a payment returned because the account lacked money to cover it. Frequent NSFs weigh against approval.

Negative days

Days the account balance was below zero during a statement period.

Deposit count

How many separate deposits hit the account in a month. Funders look at it alongside total deposits to judge how steady revenue is.

TIB (time in business)

How long the business has operated, usually in months. Many funders set a minimum before they will consider a file.

Stips (stipulations)

Extra items a funder asks for before funding, such as a processing statement, a landlord letter or a payoff letter for an existing advance.

DTI (not central to MCA)

Debt-to-income ratio is a consumer lending measure. MCA underwriting focuses on business deposits and cash flow, so DTI rarely decides an MCA file.

Industry players and compensation terms

Who does what in an MCA deal, and how the people who bring the deal get paid. ISOs can read more on our page about MCA leads for ISOs and brokers.

ISO (independent sales organization)

A company or individual that finds merchants and submits their files to funders, earning a commission on funded deals.

Broker

Often used interchangeably with ISO: an intermediary who places a merchant's file with one or more funders.

Direct funder

A company that purchases receivables with its own or its investors' capital, rather than only brokering deals.

Syndication

An arrangement in which other investors fund a share of an advance in exchange for a share of the remittances.

Buy rate

The factor rate at which a funder will do a deal before any ISO markup.

Sell rate

The factor rate presented to the merchant. The spread between buy rate and sell rate, within funder limits, can add to ISO compensation.

Points

ISO commission expressed as a percentage of the funded amount. One point equals 1%.

Commission

What an ISO earns on a funded deal, usually paid by the funder and often quoted in points.

Clawback

An ISO agreement term requiring the broker to return commission if the merchant defaults early in the term.

Lead buying terms

The vocabulary of buying merchant cash advance leads. For the full process, see how to buy MCA leads, and compare aged MCA leads with live transfers.

Real-time lead

A merchant inquiry delivered to the buyer the moment it is submitted. LoanLeads.io sells real-time exclusive MCA leads.

Aged lead

An older inquiry sold at a lower price per record. Aged leads suit volume dialing and long follow-up cadences.

Live transfer

A merchant who is on the phone and transferred live to the buyer's rep, usually priced per call.

Exclusive lead

A lead sold to one buyer only.

Shared lead

A lead sold to several buyers, who then compete to reach the merchant first.

CPL (cost per lead)

Pricing in which the buyer pays a set amount for each lead delivered.

CPA (cost per acquisition)

Pricing tied to a defined outcome, such as a completed application or a funded deal, rather than to the lead itself.

Pay-per-call

Pricing in which the buyer pays for each qualifying phone call or live transfer.

Ping-post

A real-time auction method: a partial lead is pinged to buyers for bids, and the full lead is posted to the winner. Posting alone means sending the full lead to a buyer's system.

Buy box

The written criteria a merchant must meet for a buyer to want the lead: revenue, time in business, credit, amount, industry and state.

Return policy

A provider's terms for crediting or replacing leads with bad data, such as disconnected numbers or duplicates. Terms vary by provider, so get them in writing.

Speed to lead

The time from lead delivery to the first contact attempt. Shorter is better, especially for real-time leads.

Compliance terms

The rules and tools that govern how merchants are contacted. These are general descriptions as of 2026, not legal advice; read our TCPA consent and privacy page for how LoanLeads.io approaches consent.

TCPA

The Telephone Consumer Protection Act, the federal law restricting telemarketing calls, autodialed and prerecorded calls, and texts. FCC rules under it set calling hours of 8 a.m. to 9 p.m. local time for telephone solicitations to residential numbers.

Prior express written consent

The signed agreement, which can be electronic, that the TCPA requires before certain telemarketing calls or texts using an autodialer or prerecorded voice.

TrustedForm

An ActiveProspect tool that records the page and user interactions during a form submission and issues a certificate URL as independent evidence of the lead event.

Jornaya LeadiD

A unique identifier attached to a lead event that records the consumer's journey on the form, used as a compliance audit trail.

DNC (Do Not Call)

The National Do Not Call Registry plus a company's own internal do-not-call list. Covered telemarketers must use a registry version no more than 31 days old.

Consent revocation

A person's withdrawal of consent. Under FCC rules effective April 11, 2025, it can be made by any reasonable means and must be honored within 10 business days.

A2P 10DLC

The US carrier registration system for business texts sent from standard 10-digit phone numbers. Unregistered traffic may be filtered or blocked.

CAN-SPAM

The federal law for commercial email: accurate headers and subject lines, a physical postal address and an opt-out honored within 10 business days.

CCPA

The California Consumer Privacy Act, which gives California residents rights over personal information collected by covered businesses.