Glossary · After funding
Renewal
A renewal is a new advance to a merchant who has paid down an existing one. It pays off the remaining balance, and eligibility usually starts at 40 to 60% paid in.
Also called MCA renewal, re-up, refi, renewal advance
Funders let performing merchants renew once enough of the RTR has been remitted. A threshold of 50% paid in is typical, though some funders allow 40% and a few go lower. The renewal advance first pays off the remaining balance, and the merchant receives the rest.
Renewals are the cheapest revenue an ISO has: the merchant is known and the funder has a payment history. They are also where ISOs lose money, when a merchant renews directly with the funder because nobody on the broker side noticed the window opening. Track paid-in percentage against each funder's threshold.
Formula
remaining balance = RTR − amount remitted net to merchant on renewal = new advance − fees − remaining balance
Example
A merchant has remitted $40,500 of $67,500 (60% paid in), leaving $27,000. A $75,000 renewal with a 3% fee ($2,250) puts $45,750 in the merchant's account.
Track it on every deal
Statements, offers, positions and commissions with the math worked out, in one CRM for lending companies.
Related
- FeatureRenewalsSee which funded merchants are eligible to renew now, in the next 30 days or later, from paid-in percentage and each lender's threshold, and start the renewal deal in one click.Read
- FeatureCommissions and reconciliationTrack expected versus received commissions per funded deal, split them with reps and partners, handle clawbacks, and reconcile lender commission statements line by line.Read
- GlossaryPaid-in percentagePaid-in percentage is how much of an advance's payback a merchant has remitted so far. Funders use it to decide when a merchant can renew.Read
- GlossaryRTR (right to receive)RTR is the total amount of future receivables a funder buys in a merchant cash advance: the advance times the factor rate, also called the payback.Read
- GlossaryConsolidationAn MCA consolidation is a new advance that pays off one or more existing advances at funding, so the merchant ends up with fewer debits and, ideally, a lower total payment.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