Glossary
Holdback
The share of daily card sales remitted to an MCA funder.
The holdback is the percentage of daily card receipts remitted to the funder until the purchased amount is paid, typically via the card processor or a lockbox. Because it is a percentage, remittances rise and fall with sales, which is what makes a true MCA’s term variable. Fixed daily ACH products are often marketed as MCAs but do not flex.
How it appears in a contract
"Specified percentage" of receivables; the processor split or ACH arrangement is described in an attached authorization.
Worked example
A 10% holdback on a $3,000 sales day remits $300; on a $900 day, $90. A fixed $300 daily ACH remits $300 on both days.
Illustrative figures on stated assumptions; not quotes.
What to ask
- Is the remittance a true percentage or a fixed amount estimated from a percentage?
- Can I switch processors during the term?
- How is the holdback reconciled if the estimate is wrong?
Related terms
Merchant cash advance · ACH remittance · Weekly remittance · Revenue-based financing · all terms
Educational definitions, not legal advice. Contract terms and their legal treatment vary by provider and state; read your agreement and ask a professional.
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