Merchant cash advance (MCA): A lump sum provided to a business in exchange for a portion of its future receivables, usually repaid through frequent remittances until an agreed total is collected.
Factor rate: A multiplier applied to the advance amount to set the total payback. A 1.30 factor on $50,000 means $65,000 in total payback. It is not an annual interest rate.
Total payback (purchased amount): The total dollar amount the business agrees to deliver to the provider, equal to the advance amount multiplied by the factor rate.
Financing cost: Total payback minus the advance amount. Fees deducted at funding or charged later are additional costs.
Net proceeds (net funded amount): The cash the business actually receives after any fees or payoff of an existing balance are deducted from the advance amount.
Remittance: A scheduled payment toward the total payback, commonly collected daily or weekly by ACH debit.
Holdback (specified percentage): The percentage of receipts or deposits that some agreements use to calculate payments, so the amount collected rises and falls with sales.
Reconciliation: A process described in some agreements for adjusting fixed payments to reflect actual receipts. Whether it exists, and how to request it, depends on the agreement.
Estimated term: The expected time to collect the total payback at the planned payment amount. Faster collection generally means a higher time-based cost.
Origination or administrative fee: A charge some providers deduct from the advance or bill separately. It reduces net proceeds and increases the overall cost.
Personal guarantee: A promise by an owner to be personally responsible for certain obligations under the agreement, such as performance or representations.
Confession of judgment: A document that allows a provider to obtain a court judgment without a normal lawsuit if specified conditions occur. Its use is restricted in some states.
UCC filing (UCC-1): A public filing that records a provider's claimed interest in business assets or receivables. It can affect your ability to obtain other financing.
Stacking: Taking an additional advance while one or more existing advances are still being repaid, which adds payments on top of each other.
Position (first, second): The order in which advances were taken. A second-position advance is one taken while a first remains outstanding.
Renewal: A new advance that often pays off the remaining balance of an existing one, so net new cash can be much less than the advance amount.
Broker (ISO): A business that introduces merchants to funding providers. Ventr3 is an MCA broker; it does not fund advances or set terms.
Funding provider (funder): The company that decides whether to offer an advance, sets the terms, and delivers the funds.

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Merchant cash advance terms, defined