Merchant cash advance glossary

Owners search these words after the debit has already started. This glossary is the short version in operator English. Each entry points to the live spoke on this site. We are an advisory firm. We are not a law firm and we do not provide legal advice. We do not invent industry averages or holdback percentage ranges.

Merchant cash advance

A merchant cash advance is a purchase of future receipts. It is collected as a daily or weekly debit on the operating account. It is not a monthly term loan, even when someone quotes an APR. Relief, if it is real, starts with the file: MCA debt relief and how we work a file.

Factor rate

A factor rate is a multiplier on the funded amount. Payback is the funded amount times the factor. That is pricing, not an APR. The cheap-looking factor is expensive because of how it hits the account. Compare the products on MCA vs term loan.

Holdback vs fixed ACH

A holdback is a share of receipts swept as they come in. Fixed ACH is a set daily or weekly debit, whether the day was good or not. Both take first claim on the operating account. This page does not publish holdback percentage ranges. The live problem is the debit: when daily ACH is draining the operating account.

Stacking

Stacking is more than one merchant cash advance hitting the same account. A new advance that services an old one is not consolidation. It multiplies the debit. The fourth one is the trap. Read stacked merchant cash advances.

UCC-1

A UCC-1 is public notice that a funder claims an interest in business assets. On an MCA, that is often a blanket filing. Banks decline because the filing sits on the collateral the bank would need. See UCC lien on a merchant cash advance.

UCC-3

A UCC-3 is the amendment or termination filing. On a real take-out or a negotiated close, a UCC-3 termination is often a close condition. Paying the debit does not take the public notice off by itself. We do not file. Details on UCC-1 and UCC-3.

Personal guarantee

A personal guarantee is a personal promise that the advance gets paid. Closing the LLC, changing the DBA, or leaving the entity idle does not kill it. A refinance or negotiated close needs a written release. Owner-facing facts are on personal guarantee on an MCA.

Reconciliation

Some contracts have a reconciliation or true-up against actual receipts. That is a contract path, not a mill script and not a homemade block on the debit. Diagnosis starts with whether the contract actually has it. See daily ACH and how to get out of a merchant cash advance.

Confession of judgment

A confession of judgment is counsel's morning, not an advisory form. If you have been served, if the account is frozen, or if there is a COJ, that is a lawyer today. We will say so. We do not draft that form and we do not treat it as a consulting product. The handoff is on when you need counsel on an MCA file.

16 CFR Part 444 (the Credit Practices Rule) is consumer credit only. Do not read it as a ban on commercial confessions of judgment. The sequence around a miss is on what happens if you default.

1099-C / cancelled debt

Form 1099-C is how cancelled debt is reported to the IRS. This is not tax advice. Whether a particular MCA settlement is debt, and what a 1099-C means on that file, is a CPA question. Start with IRS Topic no. 432, Form 1099-A and Form 1099-C. We do not characterize your tax result.

SBA 7(a) eligibility confusion

Owners still hear that an SBA loan will take out the merchant cash advance. As of 1 June 2025, SOP 50 10 8 says merchant cash advances and factoring agreements are not eligible for refinancing on the named 7(a) programs. That is a use-of-proceeds bar, not a slogan. Read SBA loans cannot refinance a merchant cash advance and, if take-out still exists outside that bar, refinance a merchant cash advance.

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