First Position: Meaning in a Merchant Cash Advance
First position means a funder is the first merchant cash advance on your business. It has the first claim on your receivables and usually the first UCC filing, which is why first position offers tend to come with the best terms.
What does first position mean?
Positions describe the order in which advances were taken. The first funder to buy your receivables is in first position. If you take another advance while the first is active, that funder is in second position, and so on. Being first matters because the first funder's payment is already built into your cash flow before anyone else arrives.
Why does first position matter to your business?
First position offers are usually the largest and cheapest you'll see, because the funder faces the least competition for your cash. Each additional position gets smaller and more expensive. If you're thinking about a second advance, remember you're giving up the clean first position picture and taking on combined payments.
How do you stay in first position?
Paying an advance off, or renewing with the same funder, keeps you in first position. It's often the most cost effective path for a business that needs more capital.
What does a second funder see?
When a second funder looks at a business already in first position, it sees the existing debit and sizes its own offer around what's left. That's why second position offers are smaller and cost more. The first funder's payment comes first, both in time and in priority.
How do you keep your options open?
If you think you'll need more capital soon, ask your first position funder about an add-on before you look elsewhere.
Where will you see it?
In funder conversations and underwriting notes, in the order of UCC filings on your business and in anti-stacking clauses that protect a first position funder.
Which terms are related to first position?
The full list is in the glossary. Owners ask about this in Is an MCA renewal cheaper than the first advance?.
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.