MCA mechanics · Business Funding Question
A source-backed answer for business owners comparing funding structures, costs, repayment, qualification, and risk.
Short answer
A holdback or purchased percentage is the share of eligible business receipts assigned to the MCA provider until the purchased amount has been delivered. In a true percentage-based structure, remittances should generally rise and fall with revenue. Some agreements instead use a fixed ACH estimate and provide a reconciliation process for adjusting that estimate.
Percentage withholding versus fixed ACH
With split processing, a payment processor may direct the agreed percentage of card receipts to the provider. With ACH remittance, the provider may debit an estimated daily or weekly amount from the operating account. Those methods can create very different cash-flow behavior even when the purchased percentage printed in the agreement is the same.
How holdback affects operating cash
A 12% holdback means twelve cents of each eligible revenue dollar is directed to the provider before the business uses that money for payroll, inventory, rent, taxes, or other obligations. Owners should model the percentage during both normal and weak sales periods, not only during a strong month.
Why reconciliation matters
When fixed remittances are based on estimated receipts, the agreement may allow the business to request an adjustment supported by recent bank or processor statements. Review the timing, documentation, frequency, and discretion built into that process. A right that is hard to exercise may provide less practical protection than it appears to offer.
What to ask the provider
Ask which revenue streams are included, whether gross or net receipts are used, how refunds and chargebacks are treated, how quickly remittances change after a request, and whether payment processor changes require consent. Obtain the answers in writing.
Practical example
A business averaging $8,000 in eligible weekly receipts with a 10% purchased percentage would expect roughly $800 of weekly remittances if the percentage is applied directly. If sales fall to $5,000, a percentage-based remittance would be about $500. A fixed ACH amount may not change automatically, so the reconciliation language becomes important.
Business-owner checklist
- Identify the purchased percentage
- Confirm which receipts are included
- Determine whether remittance is split-funded or fixed ACH
- Model weak, normal, and strong sales weeks
- Read the complete reconciliation procedure
Related DNVR Group guidance
- How a Merchant Cash Advance Works
- Factor Rates, Total Payback, and Daily Payments
- Compare Business Funding Offers
- What Is Reconciliation in a Merchant Cash Advance Agreement?
- How Long Does a Merchant Cash Advance Take to Repay?
Sources and further reading
Important funding disclosure
DNVR Group is a business funding intermediary. DNVR Group does not fund loans directly, make credit decisions, or guarantee approval, rates, amounts, or timelines. Offers and final terms are determined by independent third-party providers. This resource is educational and is not legal, tax, or accounting advice. Review all documents and consult qualified advisers for your circumstances.
Updated August 2026. Prepared by DNVR Group using the cited public sources. Featured photo: Kelly Sikkema on Unsplash.