MCA terms glossary: what each word in an offer or contract means

Owners and brokers: plain MCA terms, then contact the desk.

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This glossary covers the MCA terms used in merchant cash advance offers, contracts and funder files. Each one gets a short, plain definition. Terms are grouped by where you meet them: the money, the collection, positions, the contract, the file, the people and other products. No numbers are used as typical values.

By the Afterfirst Editorial Team · Updated September 24, 2026

What do the money terms mean?

These terms describe what you receive and what you repay.

Merchant cash advance: A sale of part of a business's future receivables to a funder for cash now, repaid from future sales.
Purchase price: The amount the funder pays for the receivables, before any fees come out.
Purchased amount (RTR): The total the funder is buying and will collect, also called the right to receive.
Future receivables: Card sales, deposits or other revenue the business expects to earn later.
Factor rate: A multiplier set on the purchase price that gives the purchased amount.
Buy rate: The factor rate a funder offers a broker before any broker markup.
Sell rate: The factor rate shown to the business, which can include the broker's markup.
Points: Broker pay stated as a share of the funded amount, often built into the sell rate.
Origination fee: A charge for setting up the advance, often taken out of the funding.
Underwriting or administrative fee: A charge for reviewing and managing the file, listed in the contract.
Net funding: The cash that reaches the business after fees and any payoffs are taken out.
Total payback: The full amount the business repays, equal to the purchased amount plus any separate fees.
Cost of capital: Total payback minus the cash received, the dollar price of the advance.
Estimated APR: A yearly rate worked out from the cost, the expected term and the payments; it is an estimate because sales vary.
Net new cash: In a renewal, the cash left after the old balance is paid off.

How is an advance collected?

These terms describe how the funder takes its share.

Specified percentage (holdback): The share of sales or deposits the contract lets the funder collect.
Remittance: Each payment the funder collects toward the purchased amount.
Daily ACH debit: A fixed pull from the bank account on each business day.
Weekly remittance: A fixed pull taken once a week instead of daily.
Split funding: Collection where the card processor sends the funder's share straight to the funder.
Lockbox: A bank account set up so card sales pass through it and the funder's share is taken first.
Reconciliation: A review that adjusts fixed payments to match the agreed share of actual sales.
True-up: A payment or credit that settles the gap found in a reconciliation.
Estimated term: How long collection is expected to take, based on expected sales.
Early payoff discount: A cut in the balance some contracts give when the advance is paid off early.

Which terms describe positions and stacking?

These terms describe more than one advance at a time.

Position: The order in which open advances were funded; the first funded is first position.
First position: The only advance open, or the earliest one still collecting.
Second position: A new advance taken while one earlier advance is still collecting.
Third position: A new advance taken while two earlier advances are still collecting.
Stacking: Holding more than one advance at the same time, each with its own pull.
Anti-stacking clause: A contract term that limits or bans taking another advance while one is open.
Consolidation: One new advance that pays off several open ones and replaces their pulls with one.
Reverse consolidation: A new advance that covers the old pulls in installments instead of paying them off.
Buyout: A payoff of another funder's balance made as part of a new advance.
Renewal: A new advance from the current funder, offered before the old one is paid off.
Add-on (reload): Extra funding added to an open advance, usually with a reset balance.
Payoff letter: A funder's written statement of the exact amount needed to close an advance.
Renewal eligibility: The point a funder sets before it will consider a renewal, often tied to how much is paid.
Payment load ratio: Total daily or weekly pulls divided by average deposits for the same period.

Which contract terms matter most?

These terms appear in the merchant agreement and related papers.

Merchant agreement: The contract that sets out the sale of receivables and how it is collected.
Default: A failure to meet the contract's terms, as the contract defines it.
Event of default: A specific act listed in the contract that counts as a default.
Acceleration: A clause that can make the full balance due at once after a default.
Personal guarantee: An owner's promise to be personally responsible under terms set in the contract.
Performance guaranty (validity guaranty): An owner's promise that the business will follow the contract, such as not diverting sales.
Confession of judgment: A signed statement that lets a creditor get a court judgment without a full lawsuit; some states limit its use.
UCC-1 financing statement: A public filing that gives notice of a funder's interest in a business's assets or receivables.
UCC-3 termination: A filing that ends or changes an earlier UCC-1.
UCC 9-406 notice: A notice telling a business's customers or processor to pay the funder directly.
Blanket lien: A lien that covers all of a business's assets, rather than certain ones.
Security interest: A legal claim on property that backs up a promise to pay or perform.
Recharacterization: When a court treats an advance as a loan instead of a sale because of its terms.
True sale: A transfer in which the buyer takes on the risk that the receivables are not collected.
Usury: Laws that cap interest on loans; whether they reach an advance can turn on whether it is a true sale.
Commercial financing disclosure: A standard form some states require with an offer, listing items such as total cost and payments.
Sales-based financing: Financing repaid as a share of sales or revenue, or with payments adjusted to sales.
Clawback: A rule that makes a broker return pay if an advance defaults soon after funding.

Which terms describe the file a funder reads?

These terms come up when a file is reviewed.

Funder box (credit box): The set of rules a funder uses to decide which files it will consider.
Stips (stipulations): Items a funder asks for before it funds, such as a voided check or ID.
Month-to-date (MTD) statement: A bank statement covering the current month so far.
Average daily balance: The average amount left in the account at the end of each day.
NSF (non-sufficient funds): A payment returned because the account did not have enough money.
Negative days: Days the account balance ends below zero.
True revenue: Deposits that come from sales, with transfers, refunds and financing removed.
Deposit count: How many separate deposits land in the account in a period.
Time in business: How long the business has been operating, often read from its formation date.
Restricted industries: Business types a funder will not consider.
Merchant application: The form that gives a funder the business's basic facts and consent.
Funding call (verification call): A call a funder makes before funding to confirm details with the owner.
Submission package: The application, statements and other papers a broker sends to a funder.

Who are the people on a deal?

These terms describe who does what.

Funder: The company that buys the receivables and provides the cash.
ISO (independent sales organization): A firm that brings files to funders and is paid by them.
Broker of record: The broker a funder credits with a file and pays for it.
Syndication: When other investors take a share of an advance and its collections.

Which other products get compared with an advance?

These products are often weighed against a merchant cash advance.

Revenue-based financing: Funding repaid as a share of revenue, sometimes set up as a loan and sometimes as a sale.
Invoice factoring: A sale of specific unpaid invoices to a factor, who collects from the customers.
Business line of credit: A credit limit a business can draw on and repay, paying interest on what it uses.
Term loan: A lump sum repaid with interest in set payments over a set time.

How do the glossary terms fit together on one offer?

One offer uses terms from every group above. This table shows where each group shows up.

Part of the offer	Terms you will see
The money	Purchase price, factor rate, purchased amount, net funding
The collection	Specified percentage, remittance, estimated term
Other advances	Position, payoff letter, anti-stacking clause
The contract	Personal guarantee, UCC-1, event of default

Starting from the cash you receive

Start with net funding. Then find the total payback and subtract. That gap is the cost of capital.

Pull size and schedule

Next, find the remittance and how often it runs. Compare it with a slow week of deposits.

Terms on other advances

If you already have an advance, find the anti-stacking clause. It may limit a new one.

Clauses to ask a lawyer about

Confession of judgment, acceleration and personal guarantee terms carry the most weight. Ask a lawyer when they are unclear.

Disclosure forms in some states

Some states require a disclosure form with the offer. It lists the cost and payment terms in one place.

FAQ

What does an advance cost in these terms?

The cost of capital is total payback minus the cash you receive. Fees taken at funding lower the cash you receive. Compare that cost across offers.

Which terms touch on credit?

Each funder sets its own steps, so this glossary lists none as a rule. Ask how any credit review works before you sign.

How long does an advance usually run?

The estimated term depends on sales and the pull size. It is an estimate, not a fixed date. Reconciliation can change it.

What do position terms mean if I already have an advance?

Your open advance is first position. A new one would be second position. Read the anti-stacking clause before taking it.

Is a merchant cash advance a loan?

It is written as a sale of future receivables, not a loan. Courts have sometimes treated an advance as a loan because of its terms. Whether that applies to a contract is a question for a lawyer.

Next step

Owners can Call 877-FUND-654 Email info@afterfirstmca.com and see offers that use these terms. Brokers can send files through the partner program.A person replies within one business day.

Call 877-FUND-654

Sources

California DFPI, Commercial Financing Disclosures: the disclosure items (funds provided, total cost, term, payments, prepayment) behind the glossary's commercial financing disclosure entry and the disclosure forms note; fetched 2026-09-24.
New York Financial Services Law article 8: New York's definitions naming sales-based financing and factoring transactions, two entries in this glossary; fetched 2026-09-24.
Texas OCCC, Commercial Sales-Based Financing Provider or Broker: the Texas page on provider and broker registration, context for the ISO and broker of record entries; fetched 2026-09-24.

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