Specified Percentage: Meaning in a Merchant Cash Advance
The specified percentage is the share of your sales the funder is entitled to until it has received the purchased amount. It's also called the holdback. Your daily or weekly payment is supposed to be an estimate of that percentage of your sales. If sales fall, the percentage is what reconciliation brings the payment back to.
Where does it show up?
In the contract's purchase terms, often right after the purchased amount. Some contracts show it only as a daily or weekly amount, with the percentage in the reconciliation section.
How do you check the specified percentage against your payment?
Add up a month of payments and divide by that month's deposits. When the result runs well above the specified percentage, the fixed payment no longer matches your sales, and that's the point to ask for a reconciliation.
What does it look like in practice?
A 10% specified percentage on $6,000 of daily sales sets a $600 debit. If sales fall to $4,000, the percentage says the payment should be about $400. See the holdback guide.
Which owner question goes with this term?
What happens to my MCA if sales slow down? Answers to the questions owners ask about this term, with what to ask the funder.
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.