# 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.

Holdback percentage (sometimes called the "split rate") is the percentage of a merchant's daily card-sale receipts that the funder collects during an MCA repayment period. It applies to MCAs structured as card-sale splits (Toast Capital, Square Capital, traditional MCA with processor lock).

**Typical ranges.**
- 8–12%: conservative. Daily debit feels proportional to revenue; merchant can usually absorb a slow day.
- 13–18%: standard. Tighter cash flow but workable for healthy businesses.
- 19–25%+: aggressive. High risk of cash-flow squeeze; common warning sign for B/C-paper deals.

**Why it matters.** Holdback determines how much of your daily revenue stays in your bank account during repayment. A restaurant doing $5,000 in card sales per day with a 15% holdback nets $4,250/day in available cash, with $750/day going to the funder. Over a 6-month repayment, that is roughly $135,000 collected — meaningful for budgeting.

**Fixed-daily-ACH MCAs do not have holdback.** Instead they have a fixed daily debit amount (e.g. $400/day every business day), regardless of revenue. The advantage: known cash flow impact. The disadvantage: no automatic adjustment when revenue dips. See /glossary/reconciliation for how to request a temporary reduction.

**Rule of thumb.** If holdback exceeds 15% of monthly gross deposits, your MCA is over-leveraged for your revenue base. Consider refinancing or paying off before taking another advance.

## Related terms

- [Factor rate](https://fundnode.co/llms/glossary/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.
- [Reconciliation (MCA)](https://fundnode.co/llms/glossary/reconciliation) — 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.
- [Merchant cash advance (MCA)](https://fundnode.co/llms/glossary/merchant-cash-advance) — 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.

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Source: https://fundnode.co/glossary/holdback-percentage (HTML version)
Document: Holdback percentage — Fundnode MCA Glossary
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