Representations and Warranties: Meaning in a Merchant Cash Advance
Representations and warranties are statements of fact you confirm in the contract, such as that your business is legally formed, that the information you gave is true and that you don't have undisclosed advances. If they turn out to be false, it's usually a breach.
What does representations and warranties mean?
When you sign a merchant agreement, you're confirming a list of facts about your business: who owns it, that the bank statements are genuine, that there are no lawsuits you haven't mentioned, that you have authority to sign. The funder relies on those facts when deciding to fund.
Why does representations and warranties matter to your business?
A false representation can give the funder grounds to call a default, even if every payment has cleared. That's why honesty during underwriting matters so much. Leaving out an existing advance or an open lawsuit doesn't just risk a decline. It can create a breach from day one.
How do you read the list?
Read each statement and make sure it's true for your business. If one isn't, tell the funder before signing and ask how to address it.
What if something changes after signing?
Some representations are ongoing, meaning you promise they'll stay true. Others speak only to the day you sign.
Which representations are common in MCA agreements?
Typical ones include that the business is in good standing, that you own it in the shares you stated, that you aren't planning to close or sell it, that the bank statements are genuine and complete and that you have no other advances beyond those you disclosed. Each is simple to confirm when it's true.
Where will you see it?
In a dedicated section of the merchant agreement, usually early on, and echoed in the verification call.
Which terms are related to representations and warranties?
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.