Deposit Hold: Meaning in a Merchant Cash Advance
A deposit hold is a delay a bank places before money from a deposit becomes available to spend. Federal rules set maximum hold periods for most checks, and banks extend holds for large, new-account or unusual deposits.
What does deposit hold mean?
You deposit a check and see it on your balance, but the bank doesn't let you use all of it yet. The hold gives the bank time to make sure the check won't come back. Cash and most electronic deposits are available quickly. Large checks, checks deposited into a new account or deposits after a string of overdrafts often get a longer hold.
Why does deposit hold matter to your business?
A hold can cause a returned debit on a day the balance looks fine. It can also slow the first days after funding if the advance arrives by a method your bank holds. If you're switching banks or opening a new business account, expect longer holds for the first few months, which matters when a funder's daily debit starts right away.
How do you reduce the impact of a hold?
- Ask your bank for its hold schedule by deposit type.
- Ask customers who pay by large check to pay by ACH or wire instead.
- Deposit big checks early in the week so they clear before your heavy debit days.
Do holds affect funding?
Wires generally post without a hold. If you're counting on advance funds for a specific payment, confirm with the funder how the money is sent.
Where will you see it?
On a deposit receipt or a notice from your bank. In online banking, as a difference between the ledger and available balance. Under Regulation CC, the federal rule on funds availability; the Federal Reserve explains it at federalreserve.gov.
Which terms are related to deposit hold?
The full list is in the glossary. Owners ask about this in What does an MCA payment look like on my bank statement?.
A term on your offer you don't recognize?
Send us the line and we'll tell you what it means. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.