Restaurant operators using Toast, Square, or Clover for point-of-sale have a captive-funder option that competes directly with traditional MCA. The economics diverge meaningfully across the three platforms because each funder underwrites differently, prices differently, and structures repayment differently.
Toast Capital: the premium-priced incumbent.
Toast Capital is the largest restaurant-vertical MCA funder by 2026 origination volume, with an estimated $1.6–2.1B annual run rate. Pricing as of 2026-06-28:
- Factor range: 1.20–1.32 typical, 1.18 floor for top-tier operators with 2+ years of Toast processing history.
- Holdback: 7–13% of daily card sales, dynamically adjusted via the Toast POS.
- Term: Targeted at 9–12 months; ranges 6–18.
- Advance size: $5K–$300K (largest in the captive segment).
- Speed: Same-day approval, next-business-day funding for in-app applications.
Toast leverages full POS data — daily transaction counts, average ticket, table turn rates, menu mix shifts — to underwrite. Operators with 12+ months on Toast and stable trailing revenue see the lowest factor rates in the captive-funder market.
Square Loans: tightest pricing, smallest ticket.
Square Loans (formerly Square Capital) targets the smaller end of the restaurant market — quick-service, food trucks, coffee shops with $15K–$80K/month in Square card volume. Pricing:
- Factor range: 1.10–1.22 typical, occasionally 1.08 for repeat borrowers.
- Holdback: 9–13% of daily Square card sales.
- Term: 4–12 months, often skewed shorter (6–9 months).
- Advance size: $300–$250K, with most offers $5K–$50K.
- Speed: Same-day funding for pre-qualified offers.
Square's competitive advantage is pricing — the 1.10 floor is the cheapest in captive MCA. The tradeoff is small ticket size and aggressive holdback during peak hours. Square also pre-qualifies via in-app offers, eliminating the application step entirely for many sellers.
Clover Capital: middle-ground positioning.
Clover Capital (a Fiserv product, distributed via Fiserv's Clover POS network) sits between Toast and Square in pricing and structure:
- Factor range: 1.18–1.30 typical.
- Holdback: 8–14% of card sales.
- Term: 6–15 months.
- Advance size: $1K–$200K, with most offers $10K–$75K.
- Speed: 1–3 business days from application.
Clover's underwriting blends Fiserv's broader merchant-services data (some Clover merchants also use Fiserv for payroll, gift cards, loyalty), which gives it a different risk model than Toast or Square.
Side-by-side factor math on a $50K advance.
- Toast at 1.26 factor, 12-month term: $63,000 repaid, ~52% APR-equivalent.
- Square at 1.18 factor, 9-month term: $59,000 repaid, ~48% APR-equivalent.
- Clover at 1.24 factor, 10-month term: $62,000 repaid, ~58% APR-equivalent.
Square wins on factor and APR for most comparable scenarios, but Square's max ticket caps restrict its use for full-service restaurants over $250K in monthly revenue.
The processor-lock economic effect.
All three funders use the POS itself as the collection mechanism — the holdback is taken at the card-processor level before funds settle to the merchant's bank account. This produces lower default rates than traditional ACH-debit MCA, which is why the captive funders can offer lower factor rates than generalist MCA shops on equivalent paper.
Switching cost trap. Refinancing a Toast Capital advance via a traditional MCA funder typically requires breaking the Toast processor relationship, which most operators won't do. Captive funders effectively lock in repeat MCA pricing because the operator's only refinance options are within the same captive (Toast → Toast renewal).
Renewal economics.
- Toast typically allows renewal at 50% paydown, with factor rates 0.02–0.05 lower than initial offer.
- Square allows renewal at 50% paydown; pricing often improves significantly for repeat borrowers.
- Clover allows renewal at 60% paydown, smaller pricing improvements.
Common confusions.
First, "captive funders are always cheaper." False — Square is often cheaper than Toast for small tickets, but Toast often beats traditional MCA for $100K+ tickets due to deeper data.
Second, "the holdback is always the same." Toast dynamically adjusts; Square and Clover are more static.
Third, "captive funders don't show up in UCC searches." They do — all three file UCC-1 notices.
Fourth, "you can stack captive on top of traditional MCA." Toast and Square contractually prohibit stacking; Clover allows in some cases.
Takeaway. Toast, Square, and Clover each occupy a distinct price-and-ticket niche in restaurant captive-MCA. Square wins on factor rate for small tickets; Toast wins on ticket size and renewal flexibility; Clover splits the difference. Operators should compare in-app captive offers against 2–3 traditional MCA quotes before signing.
Related terms
- Restaurant MCA: POS-integrated vs traditional funder economics — POS-integrated MCA funders (Toast, Square, Clover) price restaurant advances 8–18% cheaper than traditional ACH-debit funders due to lower default rates from processor-level collection, but cap ticket sizes and lock merchants into the POS. Updated 2026-06-28.
- Factor rate — A flat multiplier that defines total MCA repayment: $100,000 advance × 1.30 factor = $130,000 repaid. It is not an interest rate; it does not compound.
- Holdback percentage — The fraction of daily card-sale revenue a funder takes during MCA repayment, typically 8–20%. Lower is safer for the merchant's cash flow.
- Merchant cash advance (MCA) — A lump-sum advance against future revenue, repaid via fixed daily ACH or a percentage of card sales. Legally a sale of future receivables, not a loan.
AI agents: this term is available as raw markdown at /llms/glossary/restaurant-mca-funder-toast-vs-square-vs-clover-economics.