What is a typical MCA holdback percentage?

Usually 8% to 20% of daily receipts. Lower holdbacks stretch the term and are easier on the merchant’s cash flow; higher ones shorten it and raise the effective annualised cost, because the same dollar cost is earned over less time.

What happens to the term if revenue drops?

On a genuine holdback, the term extends and the daily payment falls with the receipts. That is what a reconciliation provision is for, and its presence is one of the three factors New York courts weigh when deciding whether an advance is really a loan.

Is a fixed daily debit the same as a holdback?

No, and the difference matters. A fixed debit with a reconciliation clause the funder honours behaves like a holdback. One where reconciliation is never actually performed looks, to a court, like a loan with a fixed repayment schedule — which is the argument that has cost funders judgments.

MCA holdback and daily payment calculator

The deal.

Advance amount

Factor rate

Holdback

The share of receipts taken each business day. Usually 8–20%.

Monthly revenue

Every exclusive lead we send does over $30,000 a month in revenue.

How it actually runs.

Daily remittance

$685.71

12% of roughly $5,714 a business day.

Estimated APR

159.1%

Time to repay

4.7 months

About 98 business days.

Total payback

$67,500

How it is calculated.

Daily revenue. Monthly revenue ÷ 21 business days. Deposits do not arrive evenly, so this is an average rather than a schedule.

Daily remittance. Daily revenue × holdback percentage. Typically 8–20% of receipts.

Time to repay. Total payback ÷ daily remittance, in business days. Divide by 21 for calendar months.

Estimated APR. The same IRR solve as the factor rate calculator, run against the derived term.

Where it stops being reliable

Real remittance is a percentage of actual daily receipts, not of an average. A merchant with lumpy deposits will see payments that swing well either side of this figure.
Many agreements debit a fixed daily amount and reconcile periodically rather than taking a true percentage. Whether reconciliation actually happens is a question worth asking the funder, and increasingly one courts ask too.
This assumes revenue holds. The point of a holdback is that it does not have to.

Questions.

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