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Know what you're signing
Every term a lender, broker, or contract is going to throw at you, explained the way a friend in the business would explain it. No jargon. No fine-print games. The ones that can actually hurt you are flagged.
The electronic system funders use to pull payments straight from your bank account automatically. Most daily and weekly MCA payments run on it. You authorize it when you sign.
The companion paperwork to a Confession of Judgment — a sworn statement used to enforce it fast. Same family of danger. Treat any 'confession' document as a stop sign.
Paying a loan down with regular payments where each one chips away at both interest and principal until it's gone. A normal loan is 'amortized.' An MCA is not — which is part of why it costs more.
The funder agrees to fund you, and the offer comes with terms — amount, cost, payment. But an approval is an offer, not a done deal, until you accept and sign.
The true yearly cost of money — interest AND fees rolled into one percentage. It's the only number that lets you fairly compare a bank loan to an MCA to a credit card.
A loan secured by your business assets — inventory, equipment, receivables. The more valuable your stuff, the more you can borrow, because your stuff is the lender's safety net.
The average amount sitting in your business account across the month. Funders use it to judge whether you can actually absorb the payments. A thin balance makes them nervous.
Quoted one great rate to reel you in, then — 'after review' — the terms quietly get worse right before you sign.
What you still owe right now. For an MCA, that's the remaining total payback — not the original amount you borrowed.
Usually the last 3–6 months. The single most important thing an MCA funder looks at — they care more about your daily deposits and balances than your credit score.
Short-term money to get you from 'right now' to 'the real funding lands.' A stopgap. Fast and pricey — meant to cover a gap, not to live on.
The middleman who takes your deal, shops it to funders, and earns a commission on whatever closes. A good broker saves you time and finds better options. A bad one just adds cost.
The contract between you and a broker. Read it for fees, what they're allowed to do with your info, and whether they can pull credit or sign on your behalf.
A revolving card in your business's name. Handy for everyday spend and for building business credit — but the rates bite hard if you carry a balance.
A separate score for your business's own track record of paying its bills (Dun & Bradstreet's Paydex runs 0–100). Build it up and you can eventually get funding without staking your personal credit.
A pool of money you can pull from whenever you need it, up to a limit. You only pay for what you actually use, and as you pay it back the room opens up again — like a credit card without the plastic. Great for smoothing out cash-flow gaps.
The wholesale price a funder gives a broker. An insider term. The broker then marks it up before quoting you — and that markup is their commission, baked right into your cost.
When a lender gives up trying to collect and writes your debt off as a loss. It wrecks your credit, and the debt can still get sold to collectors. A serious black mark.
A vendor or broker who only cares about the quick close, not whether the funding actually helps you — then moves on to the next merchant. The opposite of the relationship you want.
The pile of fees due when a loan finalizes — origination, processing, legal, filing. Always ask for the all-in number, not just the rate.
Something of value you pledge to back a loan — equipment, property, receivables. Don't pay, they take it. Secured loans have collateral; unsecured ones don't, which is why they cost more.
Laws in a growing number of states that force funders to show you the real cost of an MCA — including an APR-style number — before you sign, the way consumer lenders have to. Good news for owners.
A mortgage for business property — your storefront, warehouse, or office. The building is the collateral.
A document where you agree IN ADVANCE that if you default, the funder can walk into court and get a judgment against you — and freeze your bank accounts — without you ever getting to defend yourself.
One new loan that pays off several existing debts, leaving you with a single payment — ideally at a lower rate or longer term. Done right, it lowers your stress. Done wrong, it just resets the clock and costs more.
The plain version of 'what is this money actually costing me?' Add up every dollar over what you borrowed — fees, interest, the funder's cut — and that's it. Compare offers on this, not on the monthly payment.
When you don't get exactly what you asked for — maybe less money, or different terms. Totally normal. You can negotiate or walk.
How much of your available credit you're using. Maxed-out cards tank your score even when you pay on time. Keeping it under about 30% helps.
How MCAs and many short-term funders collect — small automatic chunks pulled every business day or week, instead of one monthly bill. It adds up faster than it feels.
A measure of how much spare cash flow you have to cover a loan payment. Lenders want to see comfortably more income coming in than the payment going out — proof you can carry the debt.
A no. Could be too little time in business, too many negative days, low deposits, weak credit. A decline from one funder is not a decline from all of them.
You've broken the agreement — usually by missing payments or blocking the funder's debits. Default unlocks the nasty stuff: the full balance comes due at once, plus fees, plus whatever legal weapons you signed away.
Any negative item on your credit report — late payments, collections, charge-offs, bankruptcies. The stuff funders zoom straight in on.
A funder using its own money — no middleman. Working with one can mean fewer markups, but brokers exist for a reason too: they shop many funders for you.
On a renewal, getting charged the full, un-earned cost of your old advance AND the full cost of the new one — paying the fee twice on the same money.
A break some funders give if you pay off early — they shave the total payback instead of charging the full amount. It's not standard, so get it in writing before you count on it.
A loan to buy a specific piece of equipment, where the equipment itself is the collateral. If you stop paying, they take the machine — which is exactly why it's easier to qualify for.
How MCA cost gets quoted — a decimal like 1.3 or 1.45 instead of a percentage. Multiply your advance by it to get your total payback. And it does NOT shrink if you pay early, unless your contract specifically says so.
The 300–850 number that sums up your personal credit. Most small-business funders check it, because your business and personal finances are joined at the hip. A 700+ opens the good doors.
The company actually putting up the money. In the MCA world, 'funder' is the common term. This is who you owe.
The moment the money actually hits your account. The finish line of the whole application.
A full credit check that dings your score a few points and shows up to other lenders. Too many in a short window looks desperate. Ask before anyone runs one.
The fixed slice of your daily card sales or bank deposits an MCA funder takes until you're paid off. Usually 10–20%. A higher holdback pays the advance off faster but squeezes your day-to-day cash.
The percentage a lender charges you to borrow, on top of what you pay back. Lower is better. It doesn't include fees — that's what APR is for.
You sell your unpaid customer invoices to a company at a discount to get cash now instead of waiting 30–90 days. They then collect from your customers directly. You're trading a slice of the invoice for speed.
Like factoring, but you borrow against your unpaid invoices instead of selling them. You stay in charge of collecting, and your customers never have to know.
Your contact info, packaged and sold as a sales opportunity. When you fill out an online 'check your rate' form, you often become a lead that gets sold to multiple funders and brokers — which is why your phone suddenly won't stop ringing.
A legal claim against your property or assets as security for a debt. Don't pay, and the lienholder has rights to that asset. A UCC filing is how funders place one on your business.
A setup where your sales deposits route through an account the funder controls first; they take their slice, then pass you the rest. You lose direct control of your incoming cash.
That's you — the business owner getting funded. The whole industry calls you 'the merchant.' Now you know what they mean when they say it.
It's not technically a loan — it's the funder buying a slice of your future sales at a discount. They hand you a lump sum today, then take a fixed cut of your daily or weekly deposits until they've collected the agreed total. Because it's structured as a 'purchase of receivables' instead of a loan, it sidesteps a lot of the rules real loans have to follow.
The total money flowing into your business account each month. It's often what your funding amount is based on — many funders advance you a chunk of a single month's revenue.
Days your bank account dropped below zero. Funders count them — too many says you can't carry a daily payment, and it'll cost you or kill the deal.
When a payment tries to clear and there isn't enough in the account. NSFs on your statements are a red flag to funders that your cash flow is shaky.
A fee for 'setting up' your loan, usually a percentage skimmed off the top before you ever see the money.
You're done — the balance is zero. Get it in writing. Then make sure any UCC filing against your business actually gets released.
Your signature promising that if the business can't pay, YOU pay — personally. Your house, your savings, your car can be on the line even though it's a 'business' loan.
The commission a broker adds on top of the funder's buy rate. More points means more they make — and more you pay.
A fee for paying your loan off early. Sounds insane — they punish you for being responsible — but it exists because they lose interest when you pay ahead. Always ask if there is one.
The actual amount you borrowed, before any interest or fees. Everything piled on top is the cost of using it.
A funder pays your supplier so you can fill a big order you couldn't otherwise afford to produce. Built for the moment you land a huge order but don't have the cash to make the product.
An adjustment that's supposed to lower your MCA payment when sales drop, so you only pay a true percentage of real revenue. Good funders do it automatically. Many make you fight for it with paperwork.
Replacing an existing loan with a new one — usually to get a lower rate, a smaller payment, or more time. You're swapping old debt for new debt on better terms. At least, that's the goal.
When you're partway through paying off an advance and the funder offers you fresh money. Tempting — but they often pay off the old balance and roll the unpaid cost into the new one.
Funding you pay back as a percentage of your monthly revenue, so the payment flexes up in strong months and down in slow ones. A friendlier cousin of the MCA — usually monthly and a bit more forgiving.
A funder gives you money to cover your existing MCA payments, swapping several daily pulls for one. It gets sold as a lifeline.
Credit you can use, pay down, and reuse — cards and lines of credit. The opposite of a term loan, where you take it once and pay it off.
An SBA-backed loan made specifically for big fixed assets — commercial real estate or major equipment. Long repayment, low fixed rate.
The SBA's flagship, do-almost-anything loan — working capital, buying a business, refinancing debt. A regular bank lends the money and the government backs part of it, so you get long terms and low rates. The cheapest money on this whole list. Also the slowest and most paperwork-heavy. Worth it if you can wait weeks or months.
Smaller SBA-backed loans (up to $50,000) run through nonprofit lenders, aimed at newer or smaller businesses that can't land a big bank loan yet.
Secured means the loan is backed by collateral — cheaper, but you can lose the asset. Unsecured means no collateral — pricier, and approval leans harder on your credit and revenue.
The company that collects your payments and manages the account after funding — sometimes the funder, sometimes a separate outfit. It's who you call when something's wrong with a payment.
A light credit check that does NOT hurt your score and isn't visible to other lenders. Most pre-qualifications use this. Always ask 'is this a hard or soft pull?' before you hand over your Social.
Instead of pulling from your bank, the funder takes their cut directly from your credit-card processor before the money ever reaches you. Common in older MCA structures.
Taking a second, third, or fourth MCA on top of one you already have. Each new funder piles another daily payment on you. It's the fastest way to drown a healthy business.
The documents a funder needs before they'll fund — bank statements, ID, a voided check, tax returns, proof of ownership. 'Clearing stips' just means turning in your paperwork.
When multiple funders pool money to back one advance and split the risk and return. It happens behind the curtain — mostly affects them, not you, but it's why your 'one funder' might really be several.
The straightforward one. A lump sum you pay back in fixed installments — usually monthly — over a set period, with interest. It's what most people picture when they hear 'business loan.'
The written summary of what you're being offered — amount, total payback, payment size, schedule. Read every line. This is the deal.
How long you've been operating. More time means lower risk means better offers. Many funders want at least 6 months; the good rates want 2+ years.
The full amount you'll hand back by the end — your principal plus every fee and the funder's cut. The single most important number in any offer. If you ask one question, ask this one.
Any credit account on your report — a card, a loan, a line of credit. More positive tradelines, paid on time, build a stronger credit story.
A public notice a funder files saying they have a claim on your business assets. Other funders can see it, and it can block you from getting more funding until it's cleared.
The funder's behind-the-scenes review where they decide whether to fund you, how much, and at what price. They're sizing up your risk — this is where your bank statements, credit, and time in business get judged.
A charge for reviewing and approving your application. Sometimes legitimate, sometimes just padding. Ask what it actually covers.
A 'funder' demands a fee before you get any money — for 'processing,' 'insurance,' or 'good faith.' Legit funders take their fees OUT of the funding, never before it.
Charging illegally high interest. Here's the catch: MCAs are written as 'purchases of future sales' rather than loans precisely to dodge usury limits. That legal costume is why triple-digit effective rates are even possible.
Money for the everyday running of your business — payroll, rent, inventory — rather than one big purchase. It's more of a category than a single product, and a lot of things get sold under this name.
The same loan amount can look very different depending on fees, term length, payment frequency, rate format, and total repayment. Clear definitions help business owners compare real costs instead of surface-level claims.
The electronic system funders use to pull payments straight from your bank account automatically. Most daily and weekly MCA payments run on it. You authorize it when you sign.
The companion paperwork to a Confession of Judgment — a sworn statement used to enforce it fast. Same family of danger. Treat any 'confession' document as a stop sign.
Paying a loan down with regular payments where each one chips away at both interest and principal until it's gone. A normal loan is 'amortized.' An MCA is not — which is part of why it costs more.
The funder agrees to fund you, and the offer comes with terms — amount, cost, payment. But an approval is an offer, not a done deal, until you accept and sign.
The true yearly cost of money — interest AND fees rolled into one percentage. It's the only number that lets you fairly compare a bank loan to an MCA to a credit card.
A loan secured by your business assets — inventory, equipment, receivables. The more valuable your stuff, the more you can borrow, because your stuff is the lender's safety net.
The average amount sitting in your business account across the month. Funders use it to judge whether you can actually absorb the payments. A thin balance makes them nervous.
Quoted one great rate to reel you in, then — 'after review' — the terms quietly get worse right before you sign.
What you still owe right now. For an MCA, that's the remaining total payback — not the original amount you borrowed.
Usually the last 3–6 months. The single most important thing an MCA funder looks at — they care more about your daily deposits and balances than your credit score.
Short-term money to get you from 'right now' to 'the real funding lands.' A stopgap. Fast and pricey — meant to cover a gap, not to live on.
The middleman who takes your deal, shops it to funders, and earns a commission on whatever closes. A good broker saves you time and finds better options. A bad one just adds cost.
The contract between you and a broker. Read it for fees, what they're allowed to do with your info, and whether they can pull credit or sign on your behalf.
A revolving card in your business's name. Handy for everyday spend and for building business credit — but the rates bite hard if you carry a balance.
A separate score for your business's own track record of paying its bills (Dun & Bradstreet's Paydex runs 0–100). Build it up and you can eventually get funding without staking your personal credit.
A pool of money you can pull from whenever you need it, up to a limit. You only pay for what you actually use, and as you pay it back the room opens up again — like a credit card without the plastic. Great for smoothing out cash-flow gaps.
The wholesale price a funder gives a broker. An insider term. The broker then marks it up before quoting you — and that markup is their commission, baked right into your cost.
When a lender gives up trying to collect and writes your debt off as a loss. It wrecks your credit, and the debt can still get sold to collectors. A serious black mark.
A vendor or broker who only cares about the quick close, not whether the funding actually helps you — then moves on to the next merchant. The opposite of the relationship you want.
The pile of fees due when a loan finalizes — origination, processing, legal, filing. Always ask for the all-in number, not just the rate.
Something of value you pledge to back a loan — equipment, property, receivables. Don't pay, they take it. Secured loans have collateral; unsecured ones don't, which is why they cost more.
Laws in a growing number of states that force funders to show you the real cost of an MCA — including an APR-style number — before you sign, the way consumer lenders have to. Good news for owners.
A mortgage for business property — your storefront, warehouse, or office. The building is the collateral.
A document where you agree IN ADVANCE that if you default, the funder can walk into court and get a judgment against you — and freeze your bank accounts — without you ever getting to defend yourself.
One new loan that pays off several existing debts, leaving you with a single payment — ideally at a lower rate or longer term. Done right, it lowers your stress. Done wrong, it just resets the clock and costs more.
The plain version of 'what is this money actually costing me?' Add up every dollar over what you borrowed — fees, interest, the funder's cut — and that's it. Compare offers on this, not on the monthly payment.
When you don't get exactly what you asked for — maybe less money, or different terms. Totally normal. You can negotiate or walk.
How much of your available credit you're using. Maxed-out cards tank your score even when you pay on time. Keeping it under about 30% helps.
How MCAs and many short-term funders collect — small automatic chunks pulled every business day or week, instead of one monthly bill. It adds up faster than it feels.
A measure of how much spare cash flow you have to cover a loan payment. Lenders want to see comfortably more income coming in than the payment going out — proof you can carry the debt.
A no. Could be too little time in business, too many negative days, low deposits, weak credit. A decline from one funder is not a decline from all of them.
You've broken the agreement — usually by missing payments or blocking the funder's debits. Default unlocks the nasty stuff: the full balance comes due at once, plus fees, plus whatever legal weapons you signed away.
Any negative item on your credit report — late payments, collections, charge-offs, bankruptcies. The stuff funders zoom straight in on.
A funder using its own money — no middleman. Working with one can mean fewer markups, but brokers exist for a reason too: they shop many funders for you.
On a renewal, getting charged the full, un-earned cost of your old advance AND the full cost of the new one — paying the fee twice on the same money.
A break some funders give if you pay off early — they shave the total payback instead of charging the full amount. It's not standard, so get it in writing before you count on it.
A loan to buy a specific piece of equipment, where the equipment itself is the collateral. If you stop paying, they take the machine — which is exactly why it's easier to qualify for.
How MCA cost gets quoted — a decimal like 1.3 or 1.45 instead of a percentage. Multiply your advance by it to get your total payback. And it does NOT shrink if you pay early, unless your contract specifically says so.
The 300–850 number that sums up your personal credit. Most small-business funders check it, because your business and personal finances are joined at the hip. A 700+ opens the good doors.
The company actually putting up the money. In the MCA world, 'funder' is the common term. This is who you owe.
The moment the money actually hits your account. The finish line of the whole application.
A full credit check that dings your score a few points and shows up to other lenders. Too many in a short window looks desperate. Ask before anyone runs one.
The fixed slice of your daily card sales or bank deposits an MCA funder takes until you're paid off. Usually 10–20%. A higher holdback pays the advance off faster but squeezes your day-to-day cash.
The percentage a lender charges you to borrow, on top of what you pay back. Lower is better. It doesn't include fees — that's what APR is for.
You sell your unpaid customer invoices to a company at a discount to get cash now instead of waiting 30–90 days. They then collect from your customers directly. You're trading a slice of the invoice for speed.
Like factoring, but you borrow against your unpaid invoices instead of selling them. You stay in charge of collecting, and your customers never have to know.
Your contact info, packaged and sold as a sales opportunity. When you fill out an online 'check your rate' form, you often become a lead that gets sold to multiple funders and brokers — which is why your phone suddenly won't stop ringing.
A legal claim against your property or assets as security for a debt. Don't pay, and the lienholder has rights to that asset. A UCC filing is how funders place one on your business.
A setup where your sales deposits route through an account the funder controls first; they take their slice, then pass you the rest. You lose direct control of your incoming cash.
That's you — the business owner getting funded. The whole industry calls you 'the merchant.' Now you know what they mean when they say it.
It's not technically a loan — it's the funder buying a slice of your future sales at a discount. They hand you a lump sum today, then take a fixed cut of your daily or weekly deposits until they've collected the agreed total. Because it's structured as a 'purchase of receivables' instead of a loan, it sidesteps a lot of the rules real loans have to follow.
The total money flowing into your business account each month. It's often what your funding amount is based on — many funders advance you a chunk of a single month's revenue.
Days your bank account dropped below zero. Funders count them — too many says you can't carry a daily payment, and it'll cost you or kill the deal.
When a payment tries to clear and there isn't enough in the account. NSFs on your statements are a red flag to funders that your cash flow is shaky.
A fee for 'setting up' your loan, usually a percentage skimmed off the top before you ever see the money.
You're done — the balance is zero. Get it in writing. Then make sure any UCC filing against your business actually gets released.
Your signature promising that if the business can't pay, YOU pay — personally. Your house, your savings, your car can be on the line even though it's a 'business' loan.
The commission a broker adds on top of the funder's buy rate. More points means more they make — and more you pay.
A fee for paying your loan off early. Sounds insane — they punish you for being responsible — but it exists because they lose interest when you pay ahead. Always ask if there is one.
The actual amount you borrowed, before any interest or fees. Everything piled on top is the cost of using it.
A funder pays your supplier so you can fill a big order you couldn't otherwise afford to produce. Built for the moment you land a huge order but don't have the cash to make the product.
An adjustment that's supposed to lower your MCA payment when sales drop, so you only pay a true percentage of real revenue. Good funders do it automatically. Many make you fight for it with paperwork.
Replacing an existing loan with a new one — usually to get a lower rate, a smaller payment, or more time. You're swapping old debt for new debt on better terms. At least, that's the goal.
When you're partway through paying off an advance and the funder offers you fresh money. Tempting — but they often pay off the old balance and roll the unpaid cost into the new one.
Funding you pay back as a percentage of your monthly revenue, so the payment flexes up in strong months and down in slow ones. A friendlier cousin of the MCA — usually monthly and a bit more forgiving.
A funder gives you money to cover your existing MCA payments, swapping several daily pulls for one. It gets sold as a lifeline.
Credit you can use, pay down, and reuse — cards and lines of credit. The opposite of a term loan, where you take it once and pay it off.
An SBA-backed loan made specifically for big fixed assets — commercial real estate or major equipment. Long repayment, low fixed rate.
The SBA's flagship, do-almost-anything loan — working capital, buying a business, refinancing debt. A regular bank lends the money and the government backs part of it, so you get long terms and low rates. The cheapest money on this whole list. Also the slowest and most paperwork-heavy. Worth it if you can wait weeks or months.
Smaller SBA-backed loans (up to $50,000) run through nonprofit lenders, aimed at newer or smaller businesses that can't land a big bank loan yet.
Secured means the loan is backed by collateral — cheaper, but you can lose the asset. Unsecured means no collateral — pricier, and approval leans harder on your credit and revenue.
The company that collects your payments and manages the account after funding — sometimes the funder, sometimes a separate outfit. It's who you call when something's wrong with a payment.
A light credit check that does NOT hurt your score and isn't visible to other lenders. Most pre-qualifications use this. Always ask 'is this a hard or soft pull?' before you hand over your Social.
Instead of pulling from your bank, the funder takes their cut directly from your credit-card processor before the money ever reaches you. Common in older MCA structures.
Taking a second, third, or fourth MCA on top of one you already have. Each new funder piles another daily payment on you. It's the fastest way to drown a healthy business.
The documents a funder needs before they'll fund — bank statements, ID, a voided check, tax returns, proof of ownership. 'Clearing stips' just means turning in your paperwork.
When multiple funders pool money to back one advance and split the risk and return. It happens behind the curtain — mostly affects them, not you, but it's why your 'one funder' might really be several.
The straightforward one. A lump sum you pay back in fixed installments — usually monthly — over a set period, with interest. It's what most people picture when they hear 'business loan.'
The written summary of what you're being offered — amount, total payback, payment size, schedule. Read every line. This is the deal.
How long you've been operating. More time means lower risk means better offers. Many funders want at least 6 months; the good rates want 2+ years.
The full amount you'll hand back by the end — your principal plus every fee and the funder's cut. The single most important number in any offer. If you ask one question, ask this one.
Any credit account on your report — a card, a loan, a line of credit. More positive tradelines, paid on time, build a stronger credit story.
A public notice a funder files saying they have a claim on your business assets. Other funders can see it, and it can block you from getting more funding until it's cleared.
The funder's behind-the-scenes review where they decide whether to fund you, how much, and at what price. They're sizing up your risk — this is where your bank statements, credit, and time in business get judged.
A charge for reviewing and approving your application. Sometimes legitimate, sometimes just padding. Ask what it actually covers.
A 'funder' demands a fee before you get any money — for 'processing,' 'insurance,' or 'good faith.' Legit funders take their fees OUT of the funding, never before it.
Charging illegally high interest. Here's the catch: MCAs are written as 'purchases of future sales' rather than loans precisely to dodge usury limits. That legal costume is why triple-digit effective rates are even possible.
Money for the everyday running of your business — payroll, rent, inventory — rather than one big purchase. It's more of a category than a single product, and a lot of things get sold under this name.
