MCA funder prepayment discount comparison 2026 — who pays you to pay early, who doesn't.

Why prepayment is structurally different from a loan

A bank term loan accrues interest over time. Pay it off early and you save the unaccrued interest — there's no extra negotiation needed. An MCA is the opposite. The fee is fixed the moment you sign, because legally an MCA is a purchase of future receivables, not a loan. A $50,000 advance at 1.30 factor means the funder purchased $65,000 of your future revenue. Whether you deliver that $65K in 6 months or 12 months, you delivered $65K.

So unless your contract explicitly includes a prepayment discount clause, paying early saves you nothing. The factor fee is already baked in. This is the single most important structural difference between an MCA and a loan that merchants misunderstand.

The four funder categories on prepayment policy

Every MCA funder we track falls into one of four buckets in 2026:

1. Published tiered discount schedule

The funder's contract includes a clear, written prepayment discount schedule that says "if you pay off by day X, you owe Y% of the remaining factor fee." This is the gold standard. About 15% of funders publish a real schedule. Largest examples:

• Credibly — tiered schedule: pay off in <90 days saves ~30% of remaining factor, 90–180 days ~15%, >180 days no discount
• CFG Merchant Solutions — published schedule with discounts up to 25% on early payoff
• Forward Financing — tiered, with the largest discounts in the first 60 days
• Rapid Finance — published discount schedule on most products
• Mulligan Funding — published in some product lines

2. Discretionary discount (no written schedule)

The funder doesn't publish a schedule but will offer a discount on request when you call to pay off. This is the most common — maybe 35% of funders work this way. The catch: you have to know to ask, and the discount is at the funder's discretion. Typical concessions: 5%–15% off remaining factor.

3. Payoff discount only (refi/consolidation)

The funder won't discount for early payoff in general, but WILL discount if you're refinancing into a new product with them or paying off via consolidation. This protects renewal revenue while still meeting merchants halfway. About 20% of funders work this way.

4. No discount, ever

The factor is the fee. Pay early, pay late — same total. About 30% of funders we track fall here, mostly aggressive paper-grade-C shops and some bank-backed funders that price loans rather than MCAs. Always ask before signing.

Worked example: $50K advance, paid off at month 4

Same deal, four different funders:

• Funder A (Credibly-style schedule): $50K at 1.30 factor = $65K total payback. At month 4, you've paid ~$22K so far. Remaining balance: $43K. Original fee allocated to remaining balance: ~$10K. Prepayment discount at month 4 (~120 days): 20% off remaining fee = $2,000 savings. You owe $41,000 to clear.
• Funder B (discretionary): Same deal, you call to pay off. They offer 10% off remaining factor as a courtesy. You owe $42,000 to clear. Savings: $1,000.
• Funder C (refi/consolidation only): Won't discount for a clean payoff, but WILL discount if you take a new $75K MCA with them and use proceeds to pay off. New deal economics may or may not make this worth it.
• Funder D (no discount): Owes full remaining $43,000. Pre-paying saves you zero — just frees up the daily ACH.

On a $50K advance, the prepayment discount difference between Funder A and Funder D is $2,000 — equivalent to ~13% of the original $15K fee. That's a real number that should factor into which funder you choose, especially if you might pay off early.

When does early payoff actually make sense?

The math: a $2,000 discount on $50K paid off in 4 months represents a 4% return on the $43K you used to clear the balance. Over 4 months, that's roughly a 12% annualized return. Compare that to the next-best use of the cash:

• Pay off, take a new advance later: Smart if you need more capital later AND your factor rate would be lower on the next cycle (track-record discount). Net saves $2K + lower future factor.
• Pay off, hold cash for opportunity: Smart if your business has a high-margin deployment for the freed-up daily ACH cash (inventory turn, large order funding, etc.).
• Pay off, invest elsewhere: Only smart if your alternative investment returns >12% annualized after tax. Most don't.
• Don't pay off, keep the daily ACH: Smart if your cash is needed for payroll, inventory, or another higher-priority use AND your funder has no discount, or the discount is small.

How to negotiate a prepayment discount into the contract

If you're shopping for an MCA, ask these questions before signing:

1. "Does this contract have a written prepayment discount schedule?" Answer should be yes/no and they should be able to read you the tier breakpoints.
2. "If I pay off in 60 days, what percentage of the factor fee do I owe?" Force a concrete number, not "we'll work with you."
3. "Can you add a prepayment discount schedule as a rider to the contract?" Some funders will, especially for competitive A/B paper deals. Worth asking.
4. "What's your policy on payoff discounts at refi or consolidation?" Different mechanism but same goal — lower total cost.

The state disclosure law angle

California SB 1235, New York Commercial Financing Disclosure Law, Virginia HB 1027, and Utah HB 312 all require funders to disclose total cost of capital — and increasingly, prepayment terms. Funders that operate in those states have to disclose whether the factor is "fully earned at signing" or whether prepayment reduces it. This is forcing more transparency, but it's not driving a flood of new discounts — most funders just disclose "fully earned at signing, no prepayment discount."

As state laws expand, expect more funders to add tiered prepayment schedules as a competitive feature rather than burying the no-discount policy in fine print.

The renewal-discount alternative

Many funders that don't offer prepayment discounts DO offer renewal discounts: when you take a second cycle of funding with them, the factor rate drops 5–15 bps and origination is often waived. From a "save money over time" standpoint, the renewal discount can be worth more than a prepayment discount — but only if you actually need more capital.

The decision: if you have cash and don't need more funding, prepayment discount matters. If you'll need another cycle in 6–12 months anyway, the renewal discount path often beats paying off and re-applying elsewhere.

The bottom line on prepayment discounts in 2026

• ~15% of funders publish real tiered discount schedules. Credibly, CFG, Forward Financing, Rapid Finance, Mulligan are the largest.
• ~35% offer discretionary discounts on request. Always ask before paying off.
• ~20% only discount on refi/consolidation — a way to protect renewal revenue.
• ~30% offer no discount at all. The factor is the fee, full stop.
• If you might pay off early, choose Category 1 or 2 funders. The $2K–$5K savings on a $50K deal is real money.
• If you'll renew anyway, the renewal discount often beats the prepayment discount. Run both scenarios before choosing.

The three negotiation moves that actually work

1. Get the discount schedule in writing before signing. Verbal promises from brokers don't survive into the funder's collections process.
2. Call the funder, not the broker, when you want to pay off. Brokers don't have the authority to discount; the funder's customer-service line does.
3. Time your payoff to a tier breakpoint. If the schedule discounts 30% in days 0–90 and 15% in days 91–180, paying off on day 88 saves you 15 percentage points more than paying on day 92. Real money.