Glossary · Pricing and math
Holdback
Holdback is the share of a merchant's revenue that goes to repaying a cash advance, either a fixed split of card sales or the effective share taken by fixed ACH payments.
Also called holdback percentage, withhold, split percentage, retrieval rate, remittance rate
On a true split-funded deal, the holdback is a contractual percentage of each card sale (for example 12%) sent to the funder until the RTR is delivered. On fixed ACH deals, which are most MCAs today, there is no split in the contract, so brokers and underwriters calculate an effective holdback: how much of monthly revenue the fixed payment eats.
Holdback is the main affordability check. Funders cap the combined holdback across every open position, commonly somewhere between 10% and 25% of true revenue depending on the paper. A merchant with existing positions may already be near that cap before a new offer is added.
Use true revenue, not gross deposits, as the denominator. Counting transfers and prior advance deposits as revenue makes the holdback look safer than it is.
Formula
effective holdback % = (payment × payments per month) ÷ monthly true revenue daily payments: payments per month = business days (often 21) weekly payments: payments per month = 52 ÷ 12
Example
A $535.71 daily payment over 21 business days is $11,250 a month. On $80,000 of monthly true revenue that is a 14.06% holdback.
Track it on every deal
Statements, offers, positions and commissions with the math worked out, in one CRM for lending companies.
Related
- FeatureBank statement analysisEnter each month's deposits, ADB, NSFs and negative days per bank account and get averages, revenue trend, holdback and an affordability check on the deal.Read
- FeatureOffer calculator and comparisonEnter advance, factor, buy rate, fees and frequency and get payback, net funding, payment, term, holdback and your commission. Compare every lender's offer side by side.Read
- Free toolHoldback calculatorWork out an MCA holdback percentage from the daily or weekly payment and monthly revenue, or the payment a target holdback allows. Free, no signup.Read
- Free toolStacking and positions calculatorAdd up a merchant's existing MCA positions and a proposed advance to see combined holdback, the risk band, and the largest new payment and advance that still fit.Read
- GlossaryStackingStacking means a merchant takes more than one cash advance at the same time, so several funders debit the same bank account and the combined holdback climbs.Read
- GlossaryTrue revenueTrue revenue is a merchant's real monthly sales on the bank statements: total deposits minus transfers, loan and MCA proceeds, refunds, reversals and owner money.Read
- GlossarySplit fundingSplit funding is an MCA repayment method where the card processor sends a fixed percentage of each card settlement to the funder before the merchant is paid.Read
- GlossaryACH remittanceACH remittance is repaying an MCA through fixed daily or weekly debits from the merchant's bank account until the full RTR is delivered.Read
- GlossaryPositionsA position is one open cash advance on a merchant's account, numbered in the order taken: first position, second position and so on.Read