The players in an MCA deal and how each gets paid

A single advance can touch five or six businesses. Knowing who does what keeps you from promising something only another party controls, and it explains why each one asks the questions it does.

Behind them sit service providers: the bank or ACH processor that runs the debits, the card processor on split-funded deals, and verification and collections vendors. They are paid fees and rarely appear in a broker's day.

An ISO (independent sales organization) is a broker with signed ISO agreements with funders. The agreement sets the commission schedule, the clawback window, submission rules and what the ISO may and may not do. A sub-ISO has no agreements of its own, or only a few, and sends deals through a larger ISO that does. The sub-ISO gets reach; the ISO gets deal flow and keeps a share of the commission.

Some funders sell direct to merchants as well as through brokers, and some large ISOs also fund small deals themselves. The labels describe roles on a given deal, not fixed identities. The lender matching track covers how that affects where you submit.

Take a florist with $55,000 a month in deposits. A funder approves a $30,000 advance with a buy rate of 1.32. The ISO sells it at 1.38. The funder pays 6 points of base commission plus the upsell, deducts a 2% origination fee and has a syndicator taking 25% of the deal.

payback          = $30,000 x 1.38          = $41,400
origination fee  = $30,000 x 2%            = $600
net to merchant  = $30,000 - $600          = $29,400
upsell points    = (1.38 - 1.32) x 100     = 6 points
ISO commission   = $30,000 x (6 + 6) / 100 = $3,600
sub-ISO share    = $3,600 x 50%            = $1,800 (if a sub-ISO brought it)
syndicator share = 25% of each remittance  = $10,350 of the $41,400, before fees

Notice the timing. The merchant and the broker are paid up front. The funder and its syndicators are paid only as receivables come in, and they take the loss if the merchant stops paying. That is why funders write a clawback into the ISO agreement: if the merchant defaults in the first weeks, the commission comes back. The funder's cash out on this deal is $29,400 to the merchant plus $3,600 to the ISO, $33,000 in all, against $41,400 expected back over the coming months.

Syndication lets a funder write more deals than its own balance sheet allows. Participants fund a slice and receive the same slice of each payment, after the funder's servicing or management fees, and absorb the same slice of any loss. Brokers rarely deal with syndicators directly, but it explains why a funder may say a deal is too large for one participant pool, or why approvals tighten when investor money is scarce.

Each deal records the sales rep, the ISO or broker company, the underwriter and the lender, and companies can be typed as ISO or broker, lead vendor or syndicator. Lender records hold the clawback window and renewal threshold from your agreement. When a deal funds, commission tracking creates the expected commission and applies each rep's or partner's split, so the sub-ISO's share is on record before anyone asks.