Merchant Cash Advance Terms | FAQ | Glossary
Merchant Cash Advance- Factoring of future credit card receivables. Receivables are sold at a discount for the advance amount.
Factor Rate- Cost of capital for Merchant Cash Advance. Rates range from 1.12-1.50 depending on the lender and time frame projection.
ISO- Independent sales office. This is the term direct lenders use for brokers.
Split- A split is filed with the merchant’s credit card processor so that a percentage of credit card sales can be diverted towards paying back the business cash advance. This percentage varies depending on the amount funded and the projected payback of the merchant cash advance.
ACH- Automated clearing house. ACH payments are taken daily from a business checking account.
Holdback- Percentage of credit cards that are split from daily credit card sales as payment to merchant cash advance provider.
Remit- Daily payment for an ACH or split percentage for a merchant cash advance
Syndicate- Syndication is a program that direct lenders offer to large iso’s to participate in cash advance deals.
Stacking/Double funded – Merchant has 2 outstanding cash advances. Typically the second advance is an ACH daily payment.
Lockbox- 3rd party bank account where funds from payment processor are held. Funding investor will pull daily payment from a lock box account and remaining funds will be remitted to merchant. This type of remit results in a small businesses credit card processing batches being delayed one day.
