Multiple parties each funding a portion of the same advance and sharing the returns and the risk proportionally.
Lets a funder deploy across more deals than its own balance sheet would allow, and lets brokers or outside investors participate in the return rather than only the commission. Participation percentages and loss-sharing terms vary considerably.
Points
The broker or ISO commission on a funded advance, expressed as a percentage of the funded amount.
Default rate
The share of advances that fail to be repaid in full under their original terms.
ISO
A firm that sources merchants and places their files with funders, earning points on funded volume without deploying its own capital.
Funder
The party that deploys the capital in a merchant cash advance and carries the risk of repayment.
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