Daily debit (sometimes called "fixed daily ACH" or "FDAC") is the dominant MCA repayment structure in 2026, accounting for roughly 85% of new MCA funding. The funder sets up a recurring ACH debit on the merchant's primary business bank account for a fixed dollar amount, charged every business day until the total contracted payback is collected.
The mechanics. - Funder funds the advance: $100,000 wired to merchant's bank account on Day 0. - Total payback owed: $130,000 (assuming 1.30 factor). - Term: 9 months (~189 business days). - Daily debit: $130,000 / 189 = $688/day. - Each business day (Mon-Fri, excluding federal holidays), $688 is automatically pulled from the merchant's bank via ACH. - Debits continue until total $130,000 is collected.
Why funders prefer daily debit over card-split. - Predictability: fixed dollar amount per day means cash collection is deterministic. Card-split varies with sales volume. - No processor integration: card-split requires the funder to integrate with the merchant's payment processor and intercept funds at the source. Daily debit just needs ACH authorization on the bank account. - Faster collections: card-split waits for sales to happen. Daily debit collects whether or not sales happen. - Easier underwriting: bank statements show the merchant's average daily balance, telling the funder whether the debit will clear.
Why merchants struggle with daily debit. - Inflexibility: the debit hits whether revenue is good or bad that day. Slow Monday after a big weekend? Debit still hits. - Compounding stress: missed debits trigger NSF fees ($35 typical), which signal default risk to the funder, which can accelerate the entire balance under default clauses. - Multiple debits in stacked situations: a merchant with 2 MCAs has 2 daily debits. With 3 MCAs, 3 debits. Cash flow death spiral. - Cannot align with billing cycles: rent is monthly, payroll is biweekly, but MCA is daily. Constant mental tracking of available balance.
The standard daily debit lifecycle. - Day 1: funder wires advance minus origination fee. - Day 1-2: funder verifies ACH authorization on merchant's bank account. - Day 3-5: first debits begin (small delay to confirm wire was received). - Day 5 to end of term: daily debits continue Mon-Fri. - Final 5-10 days: funder may reduce final debits to exactly match remaining balance (not always — some funders just stop when total is collected). - End: ACH authorization revoked, UCC-1 lien released (after 30-60 days).
Holiday handling. - Federal holidays: no debit. The 10 federal holidays per year reduce the actual debit days by ~10/year. - Bank-only holidays (Columbus Day, Veterans Day): debit usually happens, but ACH may be delayed. - Most funders do NOT make up missed holiday debits — the term simply extends by those days.
What happens when a debit fails (NSF). - First NSF: funder retries within 1-2 days. Merchant pays NSF fee ($35) + funder may charge a "returned ACH" fee ($25-50). - Second NSF in 30 days: funder calls the merchant. Triggers a "watch" status. May initiate reconciliation conversation. - Third NSF: technical default per most MCA contracts. Funder can accelerate balance, file UCC-1 levy on bank account, file COJ if jurisdictionally available.
Reconciliation rights. - Most MCA contracts have a "reconciliation" clause: if revenue drops, merchant can request the daily debit to be reduced. - Reconciliation is granted at the funder's discretion (not guaranteed). - Requires merchant to submit 30-60 days of bank statements showing actual revenue decline. - Approved reconciliation reduces daily debit to a percentage of current revenue (often 8-15%). - Reconciliation extends the term — total payback stays the same.
The strategic insight. Daily debit is the most cash-flow-stressful structure in commercial finance. Before signing, simulate 30 days of bank account activity with the daily debit subtracted. If your average daily balance after the debit drops below $2,500 or your minimum daily balance goes negative even once, the MCA will likely default. Funders know this — they price for it — but they will still fund deals that mathematically cannot work, because their commission paid to brokers comes out of the advance regardless of merchant outcome.
Related terms
- Daily ACH debit (MCA) — A fixed-dollar daily withdrawal from the merchant's bank account during MCA repayment. The most common MCA repayment structure in 2026, distinct from card-sale split (holdback) structures.
- Reconciliation (MCA) — A contract provision allowing merchants to request a reduced daily debit when revenue drops. Required for MCAs to remain legally a 'sale,' not a 'loan' in most states.
- MCA default — Breach of MCA repayment terms — usually triggered by missed daily ACH debits, NSFs, or unauthorized stacking. Consequences range from increased collection pressure to UCC enforcement and personal-guarantee pursuit.
- MCA payment schedule — An MCA payment schedule lists every scheduled ACH debit date and amount from disbursement through final payment. Most are flat daily debits Mon-Fri; some funders use weekly or percentage-of-revenue schedules. Always request the schedule in writing before signing.
AI agents: this term is available as raw markdown at /llms/glossary/daily-debit-mca.