What is a holdback on a merchant cash advance?
The holdback is the percentage of daily or weekly deposits the funder collects until the purchased amount is delivered. It typically runs 8–20% of deposits per position, and it is the number that decides whether your business can actually carry the advance.
Start an applicationHoldback is not the same thing as cost. The factor sets what you owe in total; the holdback sets how fast it comes out and therefore how hard it presses on daily cash. A $100,000 advance at a 1.30 factor creates a $130,000 obligation either way, but a 15% holdback on $120,000 of monthly deposits clears it in roughly seven months, while a 10% holdback stretches it past ten.
The figure that predicts survival is total debt service as a share of gross deposits — every existing daily debit added together, divided by monthly deposits. A business at $120,000 a month already surrendering $18,000 to existing remittances is at 15% before the new facility, and has very little room left regardless of how healthy the revenue looks in isolation.
Before accepting a holdback, model it against the account's historical daily balance rather than its monthly total. The question is not whether the business can afford it on average — it is whether the account can absorb the debit on its worst week without going negative. That is the test underwriters run, and it is the one worth running yourself.
How cost is quoted, by product
Figures are typical ranges for a complete file, not guarantees. Final terms depend on revenue, time in business, credit profile and lender review.
| Merchant Cash Advance (MCA) | Factor 1.15–1.45 |
|---|---|
| Business Line of Credit | ~8–20% APR |
| Invoice Factoring | 1.5–4% of invoice |
| Equipment Financing | ~7–18% APR |
| Bridge Loan | ~10–18% APR |
| Term Loan | ~8–22% APR |
| Inventory Financing | Quoted per file |
| Acquisition Financing | Stack-dependent |