Second-Position Advance
A merchant cash advance taken while a first advance is still outstanding, collecting from whatever revenue remains after the first-position advance's holdback.
Because a second-position funder is collecting after the first position has already taken its share, and is taking on more risk that revenue won’t be sufficient to cover both, second-position advances typically carry a higher factor rate than a comparable first-position deal.
Businesses considering a second-position advance should weigh the combined daily holdback of both advances together, not just the new advance’s terms on their own, since that combined amount is what actually affects day-to-day cash flow.
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