MCA underwriting glossary

Core MCA terms

Merchant Cash Advance (MCA)

A merchant cash advance is a form of financing in which a funder provides a lump sum to a business in exchange for a fixed portion of its future receipts. It is structured as a purchase of future revenue rather than a traditional loan, so repayment is tied to the business’s cash flow rather than a fixed interest schedule.

Factor rate

The factor rate is the multiplier used to calculate the total amount a merchant repays on an advance. An advance of $50,000 at a factor rate of 1.3 means the merchant repays $65,000 in total. Unlike an annual percentage rate, a factor rate is a flat multiplier and does not compound over time.

Holdback / retrieval rate

The holdback, sometimes called the retrieval rate, is the percentage of the merchant’s daily or weekly receipts withheld to repay the advance. A 12% holdback means roughly 12 cents of every dollar collected goes toward repayment until the agreed amount is satisfied.

Daily / weekly remittance (debit)

A remittance is the recurring repayment a merchant sends to a funder, typically pulled automatically on a fixed daily or weekly schedule. Consistent, equal debits on a regular cadence are one of the clearest signals of an active advance, which is why MetrikData groups them when surfacing existing positions.

Debt service

Debt service is the total amount a merchant must pay across all active advances and obligations over a given period, usually expressed as a daily or weekly figure. Weighing debt service against real revenue shows how much of incoming cash is already committed before a new advance is considered.

MCA position

An MCA position is a single active advance a merchant is currently repaying, identified by its recurring remittances, payment amount, and the funder receiving them. A merchant may carry several positions at once; MetrikData presents each one with the source transactions behind it.

Stacking

Stacking is when a merchant takes on a new advance while one or more existing advances are still being repaid, layering multiple daily or weekly remittances on top of each other. Heavy stacking can quietly consume a large share of daily cash flow and is a common precursor to default, which is why stacking detection focuses on finding every position a merchant already carries.

Cash-flow and risk terms

Deposit volume (gross deposits)

Deposit volume, or gross deposits, is the total of all money flowing into a merchant’s bank account over a period, before any deductions. Because it includes transfers, loan proceeds, and other non-sales credits, gross deposit volume can overstate how much a business actually earns.

External revenue (true revenue)

External revenue, often called true revenue, is the portion of deposits that represents genuine sales income from outside the business — payment processors, card settlements, and customer payments — with internal transfers and advance proceeds excluded. MetrikData separates external revenue from gross deposits so leverage is measured against money the business truly brings in.

Negative-balance days

Negative-balance days are days on which a merchant’s account balance fell below zero. A pattern of negative days signals thin cash reserves and elevated risk, since the business is regularly spending more than it holds. MetrikData counts these days directly from daily balances in the statements.

NSF (non-sufficient funds)

An NSF, or non-sufficient funds event, occurs when a transaction is attempted against an account that lacks the balance to cover it, often triggering a returned payment and a fee. Frequent NSF activity points to cash-flow strain and is a meaningful risk signal in bank statement review.

ACH

ACH (Automated Clearing House) is the electronic network used to move funds between U.S. bank accounts. Most MCA remittances are collected by ACH debit, so reading ACH descriptors in a statement is central to identifying who is pulling repayments and how often.

Statement and industry terms

Bank statement underwriting

Bank statement underwriting is the practice of assessing a business’s financial health primarily from its bank statements rather than tax returns or formal financials. It examines deposit volume, balances, negative days, NSF activity, and existing obligations to build a cash-flow picture. MetrikData supports this work through bank statement analysis that surfaces these figures with the transactions behind them.

Funder

A funder is the company that provides the capital for an advance and collects repayment directly from the merchant. Funders carry the financial risk of the advance and rely on accurate cash-flow review to price and approve deals.

ISO (Independent Sales Organization)

An ISO, or Independent Sales Organization, is a company that sources and packages merchant deals and submits them to funders, typically earning a commission. ISOs often review statements up front to present qualified, well-documented deals.

Broker

A broker connects merchants seeking financing with funders, gathering documentation and shopping a deal to find a fit. Brokers and ISOs overlap in practice, and both benefit from a fast, accurate read of a merchant’s statements before submission.