Holdback
The percentage of a business's daily or weekly card sales or bank deposits that an MCA provider automatically debits until the advance is fully repaid.
Holdback is how a merchant cash advance is actually collected. Instead of a fixed monthly payment like a loan, the provider takes an agreed percentage, commonly 10–20%, of the business’s daily card sales or bank deposits, automatically, until the total payback amount (advance times factor rate) is fully collected.
Because the holdback is a percentage of revenue rather than a fixed amount, the actual repayment period shortens on strong sales days and stretches on slow ones, which is different from a loan’s fixed schedule and is part of why factor rate and APR aren’t directly comparable without a conversion.
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