MCA Glossary: 14 Terms New Reps Should Know
A plain-English MCA glossary for new reps: factor rate, holdback, positions, stacking, UCC-1, ISO, paper grades and more, with the context brokers use them in.
A lexicon is the vocabulary of a group of people. The merchant cash advance trade has its own, and new reps lose deals when they nod along to words they don’t know. Here are fourteen terms you will hear on any MCA floor in your first week, defined plainly.
The deal itself
Merchant cash advance (MCA)
A purchase of a business’s future receivables at a discount. The funder pays a lump sum up front and collects a share of the business’s revenue until the agreed amount is repaid. Legally it is usually structured as a sale of receivables, not a loan.
Factor rate
The multiplier that sets the total payback. A $50,000 advance at a 1.30 factor rate means $65,000 is repaid. Reps should never present a factor rate as an interest rate; they measure different things.
Holdback
The percentage of daily or weekly revenue the funder collects until the advance is repaid. Many modern deals use a fixed daily or weekly ACH debit instead of a true percentage.
Term
How long repayment is expected to take, usually quoted in days, weeks or months.
Positions and stacking
Position
The order of a merchant’s open advances. The first advance is first position; a second advance taken while the first is still open is second position.
Stacking
Taking another advance while an earlier one is still being repaid. Funders price and approve stacked deals differently, so knowing a merchant’s open positions before you submit saves everyone time.
Consolidation
A new advance used to pay off one or more existing positions, often to lower the combined daily payment.
Renewal
A new advance to an existing merchant after part of the previous one has been repaid. Renewals are usually faster to fund because the funder already knows the merchant.
The players
ISO (independent sales organization)
A brokerage that sells funders’ products and is paid on funded deals. Most MCA agencies operate as ISOs.
Funder
The company that provides the capital. Each funder has its own “box”: the industries, time in business, revenue and credit it will approve.
Paper grade (A, B, C, D paper)
Shorthand for how strong a merchant’s file is. A paper is the strongest credit and revenue profile; D paper is the riskiest. Grades decide which funders will look at the deal and at what factor rate.
Leads and data
Aged lead
A merchant record sold after the merchant first applied for funding, usually weeks or months later and often to several shops. We compare it with intent-timed data in Aged MCA Leads vs. Intent Signals.
UCC lead
A merchant found through a public UCC-1 filing, which shows a lender took a security interest in the business. Because filings are public, every shop can pull the same names.
Intent signal
Activity on a business credit profile suggesting the owner is looking for capital now. This is the word Lexicon is built on: our AI watches business credit profiles for these signals and scores each merchant before it reaches your agency. See how it works.
Keep the lexicon handy
Bookmark this page for new hires. And if there is a term your floor uses that we have missed, tell us and we will add it.
Questions brokers ask
What is a factor rate in a merchant cash advance?
A factor rate is the multiplier that sets the total payback on an advance. A $50,000 advance at a 1.30 factor rate means the merchant repays $65,000. It is not an annual interest rate.
What does stacking mean in MCA?
Stacking is taking another advance while an earlier one is still being repaid. Each open advance is a position, so a merchant with two open advances is in second position.
