Choosing between MCA lenders comes down to three checks you can do yourself before you sign: find out who you are dealing with and whether your state requires them to register, read the handful of contract clauses that decide what happens when sales slow down, and compare every offer in dollars. A funder that passes all three, with an offer whose payment fits your slowest month of deposits, is a strong candidate, and we run these same checks with you on every offer we bring back.
We're a broker, so we won't rank funders, and no list can tell which funder suits your business without seeing your bank statements. What follows is the checklist we use when an offer lands in front of us, written so you can run it on any merchant advance offer, whether it came through us or straight from a funder.
What MCA lenders actually do
A merchant cash advance funder buys a fixed amount of your future sales at a discount. You receive the purchase price up front, and the funder collects the purchased amount through an agreed share of your deposits, usually turned into a fixed debit each business day or each week. People call it an MCA loan, but the contract is usually written as a sale of receivables, so the cost is set by a factor rate instead of an interest rate. Our post on how an MCA differs from a business loan covers that structure, and our page on revenue-based financing shows how these advances are sized and repaid.
That structure is also where the product's strengths come from. Funders decide mostly from your bank deposits rather than collateral or a high credit score, money often arrives within one to two business days, and payments are tied to your sales. Because the deal is a purchase rather than a loan, it falls under commercial financing rules that each state sets for itself, such as registration and cost disclosures, which the checks further down cover.
Direct funder or broker: what changes for you
A direct funder puts its own money (or money it manages) into your business and services the advance itself. A broker, which is what Today Capital Group is, sends your application to several funders and brings their offers back to you. We don't fund anything, approve anything or set any terms. The funder you choose does all of that, and your contract is with the funder.
Going direct means one conversation, one underwriting team and no middle party. The trade is that you see one price, and you have no easy way to know whether a second funder would have offered more money, a lower payback or a weekly schedule instead of a daily one. Going through a broker gets you several replies from one application, which is the main reason owners use one. With us there is nothing to pay to apply or to see offers.
If you already hold an offer, our post on how we try to beat an MCA offer explains what we send to funders and what comes back.
What to read in an MCA contract before you sign
An MCA contract can run past twenty pages, but the clauses below are the ones that set your cost and how the payment adjusts if sales slow down. Ask the funder to point to each one by page and paragraph, or send the contract to us and we will go through it with you.
Purchase price and purchased amount
The purchase price is what the funder pays you, and the purchased amount is what you repay. Divide the second by the first to get the factor rate. Then check the net funding, the amount that actually reaches your account once origination, underwriting and wire fees come off. On the example letter above, a $50,000 purchase price with a $1,500 fee puts $48,500 in the account against a $72,500 purchased amount. Our guide to factor rates works through the full cost math.
Specified percentage and the payment
The specified percentage is the share of your receipts the funder is buying. Most contracts turn it into a fixed daily or weekly debit based on your average deposits. Check that the fixed payment really matches the percentage applied to your recent deposits, and test it against your slowest month, along with the reconciliation clause below that brings the payment back in line when deposits dip.
Reconciliation
A reconciliation clause lets you ask the funder to compare what it collected with the specified percentage of your actual sales and adjust the payment when sales fall. Virginia's statute describes this as a true-up that brings a fixed payment back to a percentage of sales. Read how often you can ask, what documents you have to send (usually bank statements), and how many days the funder has to respond. A clause you can actually use is worth real money in a slow season.
Stacking clause
Most MCA contracts forbid taking another advance against the same receivables without the funder's written consent, and breaking that rule is usually listed as a default. If you think you might need more money before this advance is paid, ask now how the funder handles a second position or a renewal, and get the answer in writing.
Personal guarantee
Many MCA contracts ask the owner to sign a guarantee. Read what it covers. Some guarantees are limited to your performance under the contract, such as keeping deposits flowing to the agreed account and not switching banks, while others extend to repayment itself. The wording decides how far your personal commitment goes, so it is worth knowing which kind you are signing.
Confession of judgment
A confession of judgment is a signed statement that lets the funder enter a court judgment against you without a lawsuit if you default. States treat these very differently. New York changed its law in 2019 so that a confession can only be filed in the county where the defendant lived when it was signed or lives at filing, and a business counts as living where it has a place of business, so New York's CPLR 3218 no longer reaches an owner with no New York location. Virginia goes further and makes any confession of judgment provision in a sales-based financing contract unenforceable. If you see one, ask a lawyer in your state what it means for you before you sign.
UCC filing
Most funders file a UCC-1 financing statement with your state, which records their interest in your receivables. Other funders will see it when they search your business, and some will not fund behind it. Ask whether the filing is limited to the purchased receivables or covers all business assets, and ask the funder to confirm it will file a termination once the advance is paid in full.
Early payoff terms
With a standard factor rate, the purchased amount is fixed at signing, so the cost in dollars is the same whenever you finish paying. Some contracts include an early payoff discount that lowers the payback if you clear the balance within a set window. If the contract has one, get the schedule in dollars. If it does not, ask for one before you sign.
Signs an offer needs a closer look
Choosing well also means knowing the few signs that call for a closer look before you go further. They are easy to spot once you know them, and we check for each of them on every offer we bring you.
- The funder or broker asks for a fee before any money is funded, whether it is called a processing fee, an underwriting deposit or insurance. Legitimate fees on an MCA come out of the funding itself and appear on the disclosure.
- Someone pushes you to sign the same day, says the offer expires in an hour, or will not send the contract until you agree to take it. A real offer can wait long enough for you to read it.
- The contract has blank fields, or the version sent for signature differs from the offer you were quoted. Compare the purchase price, purchased amount, fees and payment on both before you sign anything electronically.
- Anyone promises guaranteed approval before seeing your bank statements. Funders decide from your deposits, time in business and existing balances, so nobody can promise an approval in advance.
- The funder will not give you its legal name and address, or the name on the contract does not match the company you spoke with.
How to check an MCA funder
Start with the legal name on the contract, then run it through the checks that apply in your state and a few that apply everywhere.
- In Virginia, both sales-based financing providers and brokers have to register with the State Corporation Commission, subject to a few exemptions such as single deals over $500,000. Ask for the registration and confirm it with the Commission.
- In Utah, a provider has to register with the Department of Financial Institutions before doing commercial financing in Utah or with a Utah resident, a rule that took effect on January 1, 2023.
- In California, funders have had to give a standard cost disclosure since December 9, 2022, and since October 1, 2023 the state's rules have barred unfair, deceptive or abusive practices by commercial financing providers, MCA funders included. The DFPI asks owners to file a complaint if they were misled or did not receive the disclosure.
- Search the funder's legal name in court records for the state named in the contract's governing law clause and for your own state, and in the federal PACER system. Collection suits are normal for a large funder, but suits brought against it by merchants or regulators deserve a closer read.
- Look the company up with the Better Business Bureau and read the complaints and how the funder answered them, which often tells you more than the rating.
How to compare two merchant cash advance offers in dollars
Line two offers up on the same four numbers, which are the money that reaches your account, the total you repay, the payment and how often it is taken. With those on paper, the better fit for your business is usually clear.
- Write down the net funding for each offer. In the example, Offer A carries a $1,500 fee and puts $48,500 in your account, and Offer B, assuming no fee, puts in the full $50,000.
- Subtract net funding from the total payback to get the dollar cost. Offer A costs $24,000 for $48,500, and Offer B costs $16,000 for $50,000.
- Check each payment against your slowest month of deposits. Offer A takes about $604 every business day for roughly 120 days, and Offer B takes $2,200 a week for about 30 weeks.
- Read the reconciliation, early payoff and stacking clauses on both, because a usable reconciliation clause or a real early payoff discount can matter more than a small gap in price.
In this example Offer B costs $8,000 less and takes money out of the account 30 times instead of about 120. If you already hold an offer like Offer A, you can send it to us and we'll ask the funders in our network whether they can improve it.
What funders look at before they make an offer
Every funder sets its own thresholds, but the funders we work with generally look for at least a year in business and about $20,000 a month in deposits. If you're not there yet, apply anyway. Some funders work with newer or smaller businesses, and we'll tell you what's realistic. Matching does not need a hard credit pull, since most funders prequalify from bank statements and a soft pull, and if a funder wants a hard pull in final underwriting, you'll know first. Our post on how to qualify for a merchant cash advance goes through what underwriters read on your statements.
To see what funders would offer your business, start the short application and add four months of business bank statements. There is nothing to pay to apply or to see offers, and no obligation to take one. If you'd like to go through a contract you already have, call (818) 351-0225 or send our team a message.
Questions owners ask about MCA lenders
What is MCA lending?
MCA lending is the common name for merchant cash advances, where a funder pays a business a lump sum now in exchange for a fixed amount of its future sales, collected as a share of deposits or as a fixed daily or weekly debit until the purchased amount is repaid. Most contracts are written as a purchase of receivables rather than a loan, so the cost is set by a factor rate, and the full purchased amount is owed unless the contract includes an early payoff discount.
How to get rid of MCA loans?
You can pay the balance off, ask your funder for an early payoff discount or a modified payment, or replace one or more advances with a single longer-term facility through MCA consolidation, where the new funder pays the existing ones directly and the total may not go down. If you have already missed payments, talk to a lawyer before you sign anything new.
Can MCA lenders freeze your account?
Not while the advance is current, since the funder takes its payments by debiting your account under the authorization you signed. Freezing an account generally takes court process after a default, once the funder has a judgment and uses the enforcement tools of that state, such as a levy or, in New York, a restraining notice served on your bank under CPLR 5222, which bars transfers of the restrained funds until the judgment is paid or vacated. Some states allow faster routes, and Connecticut law, for example, lets a plaintiff whose commercial contract includes a waiver of notice and hearing issue a prejudgment remedy writ without a court order, which can tie up a bank account before the case is decided, so read the governing law clause and ask a lawyer about it.
Can you negotiate MCA loans?
You can, and the best time is before you sign, when you can ask for a lower purchased amount, smaller fees, weekly instead of daily payments, an early payoff discount or a clearer reconciliation clause, and when another offer gives you something to compare against. After signing, you can request reconciliation under the contract if sales have fallen or ask the funder for a modified payment, though the funder decides whether to agree.
Are MCA lenders regulated?
Yes, under commercial financing rules that differ from bank lending rules, because most MCA contracts are structured as purchases of future sales rather than loans. Several states have their own rules, such as registration in Virginia and Utah, disclosures and conduct rules in California, and limits on confessions of judgment in New York and Virginia, so your protections depend on where your business is and which state's law the contract names.
