MCA glossary
Every term on a merchant cash advance statement, in plain English — written for investors, not brokers.
- Merchant cash advance (MCA)
- A purchase of a business's future receivables at a discount. The funder advances cash today and collects a fixed total back through daily or weekly payments. It is a purchase of receivables, not a loan.
- Factor rate
- The one-time multiplier applied to the advance that sets total repayment. A $10,000 advance at a 1.35 factor rate repays $13,500. It is not an interest rate and does not fall if the deal pays back early.
- RTR (Right To Receive)
- The total dollars owed on a deal: advance amount × factor rate. Investor statements usually show RTR added, applied RTR and ending RTR.
- Applied RTR
- The portion of RTR already collected from the merchant. Applied RTR ÷ total RTR is percentage paid.
- Percentage paid
- How much of a deal's total repayment has been collected so far. Used with the funder's status to judge whether a deal is healthy, slow or heading to default.
- Holdback
- The share of daily card or bank receipts the funder withholds until the RTR is collected. A higher holdback means faster payback.
- Capital deployed
- The dollars funded into new deals during a period. For an investor, this is money leaving the wallet and going to work.
- Wallet balance
- Cash sitting in the investor's funder account that has not been deployed into a deal. A high balance is idle capital, not profit.
- Syndication
- Investing alongside a funder in a deal. Syndicates take a share of the advance and the same share of the collections, fees and losses.
- Participation
- The percentage of a single deal an investor owns. A 10% participation in a $100,000 advance means $10,000 funded and 10% of RTR collected.
- Management fee
- A fee the funder charges on collections, usually a percentage of each payment applied to the deal.
- Upfront commission
- A fee charged when a new deal is funded, covering broker commission and origination costs.
- Write-off
- The remaining uncollected RTR the funder marks as a loss when a deal stops paying and collection efforts end. Write-offs reduce realized profit.
- Recovery
- Money collected after a deal defaulted, through settlement, legal action or a payment plan.
- Default
- A deal that has stopped paying and is no longer expected to complete its repayment schedule on normal terms.
- Slow pay / at risk
- A deal still paying but behind the expected pace for its term. These deals often precede defaults, so investors watch them closely.
- Days to payoff
- Estimated calendar days until a deal finishes repaying, based on how fast dollars are actually being collected rather than the contracted term.
- Realized profit
- Collections and recoveries minus advanced capital, fees and write-offs on deals that have closed. It is the money actually earned, not projected.
- Projected profit
- Expected profit from deals still paying, based on remaining RTR and current performance. It is an estimate and falls when deals default.
- Closing report
- A funder export listing closed deals with advance, applied and ending RTR, fees, write-offs and recoveries. It is what makes deal-level profit and loss accurate.
- Portfolio report
- A funder export listing every deal with status, RTR and percentage paid. It is the usual starting point for tracking a wallet.
- Net payments
- Repayments received after funder fees are subtracted. This is the cash that actually lands in the wallet.