Juniperhollow Funding, a small-business funding broker in Lawton, Oklahoma, explains merchant cash advances: a funder pays a lump sum for a share of future receivables and collects a fixed total through a holdback or scheduled debits. A merchant cash advance is not a loan. This page covers holdbacks, reconciliation, factor pricing, stacking and default. The funder sets every term.
| What it is | A purchase of future receivables. A merchant cash advance is not a loan. |
|---|---|
| How it is collected | Through a holdback on sales, or set daily or weekly debits |
| How cost is stated | A factor applied to the advance; the total to be remitted is set in the contract |
| Clauses to read | Reconciliation, stacking, default, confession of judgment, personal guarantee |
| Who decides | Price and terms come from the funder alone |
| Office | 301 SW C Ave, Lawton, OK 73501 · (580) 204-5667 |
What is actually being sold
In a merchant cash advance, the business sells a specified amount of its future receipts to a funder in exchange for a smaller sum paid now. Because it is structured as a purchase rather than borrowing, a merchant cash advance is not a loan, and it does not come with an interest rate or a fixed maturity date. The funder collects from the business's sales, and the contract calls each payment a remittance, until the purchased amount has been delivered.
What is a holdback percentage?
The holdback is the slice of each day's card or bank receipts routed to the funder. If sales are strong, more is collected each day and the advance is satisfied sooner; if sales slow, daily collections shrink. Some funders instead debit a fixed amount from the bank account each business day or each week, estimated from average sales. A fixed debit does not fall automatically when sales drop, which is where reconciliation matters.
Reconciliation when sales fall
A reconciliation clause lets the business ask the funder to adjust fixed debits to match actual receipts over a period. Read exactly how to request it, what records are needed, how often it can be used and how long the funder has to respond. A contract with no workable reconciliation behaves much like a fixed payment obligation, whatever it is called.
Factor, total remittance and real cost
Pricing is expressed as a factor: the advance multiplied by the factor gives the total the business must remit. What separates those two figures is the cost of the advance. Because the total is fixed, collecting it faster does not reduce it; a short collection period means the same cost is paid over fewer days, which makes the effective cost higher than it may first appear.
Before comparing offers, write three numbers side by side: the cash you receive after any fees, the total to be remitted, and the expected collection period. Then compare that against working capital or other options on total dollars, not on how quickly the money arrives.
A merchant cash advance example, in words
Picture a hypothetical café whose card sales go into one bank account. A funder offers a lump sum and states the total it will collect. The holdback means a share of each day's card settlement goes to the funder until that total is reached. On a busy weekend more is collected; in a slow week less. The café's real question is whether its remaining daily cash covers food, wages and rent after the holdback, every day of the collection period.
What is loan stacking, and why it matters here
Stacking means taking a second advance or loan while the first is still being collected. Many advance contracts forbid it, and a funder may treat a new advance as a default. Stacked collections also compound: two holdbacks or two daily debits come out of the same sales. If you already have an advance, tell us before anything else is requested.
Is a merchant cash advance reported to credit bureaus?
Practices vary by funder. Some do not report routine collections to business credit bureaus, others report, and many check the owner's personal credit when reviewing the request. A default can lead to collection action and court judgments that appear in public records. Put the question to the funder: what gets reported, and when?
Default, guarantees and the UCC filing
Read the default section closely: what counts as a default, whether changing bank accounts or closing the business triggers it, whether the owner signs a personal guarantee of performance, and whether there is a confession of judgment. Most funders also file a UCC financing statement against receivables. A merchant cash advance is not a loan, but its remedies can still reach the owner. Weigh it against the other options under financing by industry and on the Lawton, OK page; how a request moves explains our part.
By Juniperhollow Funding · Updated
