Question 1

How do I repay an MCA?

Accepted Answer

Most owners repay through automatic daily or weekly debits from the business bank account. Some pay through a split, where the card processor sends a share of each day's card sales to the funder, so payments move with sales. Payments keep going until the purchased amount is paid in full. Your contract says which method applies and how the amount can change.

Question 2

What is a holdback?

Accepted Answer

A holdback is the percentage of your sales the funder collects toward repayment. With a split, payments rise when sales go up and fall when sales drop. With fixed debits, the holdback is the basis for the payment amount, and reconciliation is how the payment gets adjusted to your real sales. Check which setup your contract uses.

Question 3

What holdback percentage should I expect?

Accepted Answer

It depends on the funder and your file, so there's no standard number to aim for. The real test is whether your daily cash covers the holdback plus every other payment, rent and payroll. Run the numbers on a normal week and a slow week before you sign. The MCA payment calculator shows what each offer takes.

Question 4

Can I pay weekly instead of daily?

Accepted Answer

Many funders offer weekly payments, and weekly is easier to plan around, because you see one debit instead of five. The total payback is usually the same either way. Ask for weekly when you compare offers, and check whether choosing it changes the price, the term or the amount you're offered.

Question 5

Do MCA payments come out on weekends and holidays?

Accepted Answer

Daily debits usually run on business days only, because they move through the banking system, which is closed on weekends and bank holidays. A debit skipped for a holiday is often collected on the next business day, so keep an eye on your balance around long weekends. Your contract lists the payment days.

Question 6

How long does an MCA last?

Accepted Answer

It depends on your payment and, with a split, on your sales. With fixed debits, divide the total payback by the payment amount to count the payments left. With a split, slower sales stretch the payback out and faster sales finish it sooner. The expected payback time on the offer is an estimate, not a promise, so plan for a slow stretch.

Question 7

What is reconciliation?

Accepted Answer

Reconciliation is your right, in many contracts, to ask the funder to adjust your payments to match your actual sales when revenue falls. You usually send recent bank statements, and the funder recalculates the payment from the holdback percentage. Check your contract for how to ask, how often you can ask and what documents you need, and ask in writing.

Question 8

What happens if my sales slow down?

Accepted Answer

Call the funder right away and ask about reconciliation or a temporary payment change, and send recent statements that show the drop. Waiting until payments bounce leaves you fewer options and can trigger the default terms. A funder would usually rather adjust payments than chase a default, so an early, honest call tends to go better.

Question 9

What happens if a payment bounces?

Accepted Answer

The funder can charge a returned-payment fee and try the debit again. Repeated misses can trigger the default terms, which may add fees or let the funder demand the full balance. Call the funder before a payment bounces, not after, and ask for a reconciliation or a short payment change in writing.

Question 10

What counts as a default on an MCA?

Accepted Answer

Common triggers are blocking the funder's debits, changing bank accounts without notice, diverting sales to another account, taking a new advance against an anti-stacking clause, or closing the business without notice. Under a contract that adjusts to sales, a slow month alone usually isn't a default. Read the default section of your contract closely.

Question 11

Can I change bank accounts during an MCA?

Accepted Answer

Yes, but tell the funder first. Moving deposits without notice is a common default trigger. The funder sets up the debit on the new account, often with a new authorization form. Keep the old account open until the switch is confirmed, so no payment bounces in between the two accounts.

Question 12

How do I get a payoff letter, and what should I get when I'm done?

Accepted Answer

Ask the funder in writing for a payoff letter that shows the exact amount to finish, any early payoff discount and the date it's good through. Once you've paid in full, ask for a zero-balance letter and a UCC-3 termination of the lien. Keep both, because other funders and lenders will want to see them.

Merchant Cash Advance Repayment FAQ

Repayment and holdback