MCA Education
MCA repayment doesn't work like a loan. There are no monthly bills, no interest charges, and no penalty for slow days. The MCA provider debits a daily percentage of your bank deposits until the total payback is reached. Here's exactly how it works — in plain numbers.
MCA repayment is automatic daily debits of a fixed percentage of your bank deposits (typically 8–15%). The total you repay is your advance amount multiplied by the factor rate (example: $40,000 × 1.25 = $50,000 payback). When total debits reach $50,000, the MCA is paid in full. If deposits slow down, daily debits are smaller and payoff takes longer — no fixed end date, no penalty.
Four concepts that define how your MCA repayment works.
A $40,000 MCA at a 1.25 factor rate — here's how the math works.
| Day | Bank Deposits | Holdback (10%) | Remitted to MCA | Remaining Balance |
|---|---|---|---|---|
| Monday | $2,200 | 10% | $220 | $49,780 |
| Tuesday | $800 | 10% | $80 | $49,700 |
| Wednesday | $1,600 | 10% | $160 | $49,540 |
| Thursday | $3,100 | 10% | $310 | $49,230 |
| Friday | $2,800 | 10% | $280 | $48,950 |
| Week 1 Total | $10,500 | $1,050 | $48,950 remaining |
Notice: Tuesday's $800 deposit day generated only $80 in remittance — not $150. The holdback percentage is fixed. The daily dollar amount adjusts with your revenue, protecting your cash flow on slow days.
What happens from the day you're funded to the day the MCA is paid off.
After approval and signing, the MCA provider deposits the advance amount directly into your business bank account — the same account used for your deposit history review. Funds typically arrive within 24 hours of final contract execution.
Starting the next business day (or as specified in your contract), the MCA provider debits the holdback percentage from each day's bank deposits automatically via ACH. No action required from you — this happens every business day.
The holdback percentage is fixed. The dollar amount isn't. If you deposit $3,000 one day and $800 the next, your remittance is $300 and $80 respectively (at 10% holdback). High-volume days pay more toward the balance. Slow days pay less. The timeline adjusts automatically.
Unlike loans, MCA doesn't generate monthly interest statements. The payback amount is fixed at funding. No compounding, no late fees for slow months, no APR clock ticking. You owe $50,000 on day 1 and that number only goes down as you remit.
When cumulative daily remittances reach the total payback amount, the MCA is paid in full. ACH debits stop automatically. Your bank account operates normally. Many businesses renew immediately — a renewal offer is typically available once 50–70% of the payback amount has been remitted.
MCA repayment is automatic daily ACH debits of a fixed percentage of your business bank deposits (holdback rate, typically 8–15%). On high-revenue days, the debit is larger. On slow days, it's smaller. The MCA is paid off when cumulative remittances reach the total payback amount (advance × factor rate).
A factor rate is a multiplier applied to the advance amount to determine total payback. A factor rate of 1.25 on a $40,000 advance = $50,000 total repayment. Factor rates typically range from 1.10 to 1.45 depending on your credit profile and deposit history. They are fixed at funding and do not compound.
The holdback rate (also called remittance rate) is the percentage of each day's business bank deposits automatically debited toward MCA repayment. Typical holdback rates range from 8–15%. A 10% holdback on a day with $3,000 in deposits means $300 is remitted that day.
Because MCA remittance is a percentage of deposits — not a fixed amount — if your daily deposits decrease, your daily remittance amount also decreases. When business slows, so does the daily repayment. The overall payoff timeline extends, but daily cash pressure is reduced. This is one of MCA's key structural advantages over fixed loan payments.
Yes, in most cases. Early payoff means paying the remaining balance of the payback amount. Most MCA providers do not offer a discount for early payoff — the factor rate is fixed. However, some providers offer early payoff discounts — confirm this before signing. Paying off early does not reduce the cost unless a discount is explicitly offered.
Yes. Most MCA providers offer renewal once 50–70% of the original payback amount has been remitted. A renewal typically consolidates the remaining balance with the new advance. Renewal factor rates and terms depend on current financial performance and repayment history.
One-page application. 3 months of bank statements. We'll show you the advance amount, factor rate, holdback rate, and estimated payoff timeline before you sign anything.
Or call/text: 330-238-3003
