Most merchants sign an MCA on a phone, in a hurry, from a link. That is how the contract is designed to be signed. You can still read it now, and what it says is what controls your payments.
If you only have ten minutes, find these four things and write them down for every advance you have:
What a $100,000 advance really looks like
Purchase price (funding amount)$100,000
Factor rate1.35
Purchased amount you owe back$135,000
Fees taken out of the funding−$3,000
Cash that actually lands in your account$97,000
What the advance costs you$38,000
The fees are the part most merchants miss. They come out before the money reaches you, but the factor rate is charged on the full purchase price.
- Purchase price
- The amount the funder pays you for your future receivables. This is the "funding amount" before fees come out.
- Purchased amount
- The total you agree to deliver back. Also called the payback, the RTR ("right to receive") or the receivables purchased. Purchase price times the factor rate.
- Factor rate
- The multiplier, such as 1.35. A $100,000 advance at 1.35 means $135,000 delivered back. It is not an interest rate; see the factor-rate guide for what it really costs.
- Specified percentage
- The share of your sales the funder bought, also called the holdback. This is the number reconciliation is built on. Find it first.
- Daily or weekly amount
- The fixed debit (the "remittance") the funder actually takes. It is meant to be an estimate of the specified percentage of your sales.
- Fees
- Origination, underwriting, ACH, wire and "administrative" fees, usually taken out of the funding. A $100,000 deal with $3,000 in fees puts $97,000 in your account, but you still owe the full purchased amount.
- Reconciliation
- Your right to have the debit recalculated to match real sales. Note how often you can ask, what you must send, and where to send it.
- Events of default
- The list of things that let the funder demand the full balance at once. Common ones: blocking debits, changing bank accounts, taking another advance, selling the business, giving false information.
- Personal guaranty
- Usually a "performance" guaranty: the owner promises the business will keep the contract's promises (not block debits, not lie, not divert sales). Many say they do not guarantee payment if sales simply fall. Read the exact wording.
- Confession of judgment
- A signed statement letting the funder get a court judgment without a lawsuit if you default. Since 2019, New York only accepts these against New York residents, and many funders have dropped them, but check your agreement.
- Security interest and UCC lien
- The funder files a UCC-1 against your business assets and receivables. After a default, many agreements let the funder notify your customers or card processor to pay it directly.
- Anti-stacking clause
- A promise not to take another advance against the same receivables. Breaking it is usually an event of default.
- Venue, law and jury waiver
- Which state's law applies, where disputes are heard, and whether you gave up a jury trial or agreed to arbitration.
- Early payoff discount
- Whether paying off early lowers what you owe. Many MCAs have no discount: the full purchased amount is due however early you pay.
Education only, not legal advice. Agreements differ; your contract's exact wording controls.