Merchant Agreement: Meaning in a Merchant Cash Advance
The merchant agreement is the main contract for a merchant cash advance. It sets out the sale of a share of your future receivables to the funder, the price, the payment terms, the promises each side makes and what happens if something goes wrong.
What does merchant agreement mean?
Everything about your advance lives in this document. It names your business as the seller and the funder as the purchaser. It states the purchase price you receive, the purchased amount you'll deliver, the specified percentage or fixed payment, the fees and the reconciliation process. It also includes the personal guarantee, the ACH authorization and the default terms, sometimes as separate attachments.
Why does merchant agreement matter to your business?
The merchant agreement is what a funder, a court or an arbitrator will look at if there's ever a disagreement. What a salesperson said on the phone doesn't count if it isn't in here. Reading it before you sign is the single best protection you have, and keeping a copy afterward lets you check your payments, ask for reconciliation and plan a payoff.
Which sections do owners skip?
Payment, fees, reconciliation, default, guarantee and dispute resolution are the pages that shape your experience. Read those slowly, even if you skim the rest. If a section doesn't make sense, ask before you sign, not after the first payment.
Why keep a copy for your records?
Download the fully signed version as soon as the envelope completes and save it with your offer and closing statement.
Where will you see it?
In your e-signature envelope when you accept an offer, usually as the first and longest document. It's sometimes titled a purchase and sale of future receivables agreement or a revenue purchase agreement.
Which terms are related to merchant agreement?
- Future receivables
- Purchased amount
- Events of default
- Guarantor
- Electronic signature
- Can a nonprofit get a merchant cash advance?
The full list is in the glossary. Owners ask about this in What's the difference between an MCA approval and an offer?.
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.