# MCA funder default rate by industry (2026) > 2026 MCA default rates by industry: medical 4%, professional services 6%, retail 11%, restaurant 14%, beauty 12%, auto repair 10%, trucking 18%, construction 16%. Default rate by industry is the inverse signal to approval rate — it reveals where funders are losing money and explains the selectivity baked into industry-tier underwriting matrices. Understanding industry default rates helps brokers set merchant expectations and funders calibrate pricing. **Default-rate methodology.** "Default" here means the funder has declared the account in formal default, typically after 60–90 days of failed ACH or formal contract breach. Some funders define default narrower (90+ days NSF only); some broader (any breach). These figures use the 60+ day standard for consistency. Source: aggregated 2026 industry data from deBanked, OnDeck disclosures (public), and shared portfolio metrics at MCA industry events. **Tier-1 industries (default rate under 8%).** - **Medical / dental / veterinary:** 4% default. Stable insurance receivables; professional accountability. - **Professional services (law, accounting, consulting):** 6% default. Reliable billing. - **Manufacturing:** 7% default. Capital-intensive but managed. - **Technology / SaaS services:** 6% default. Recurring revenue stability. **Tier-2 industries (default rate 8–12%).** - **Auto repair / body shops:** 10% default. Cash-flow seasonality but resilient demand. - **Retail (established):** 11% default. Mix of strong and stressed segments. - **Beauty / salons / spas:** 12% default. Recovered post-2020; consumer-discretionary risk remains. - **Wholesale / distribution:** 10% default. **Tier-3 industries (default rate 12–16%).** - **Restaurant (full service):** 14% default. Margin pressure, labor costs, inflationary input costs. - **Restaurant (quick service):** 13% default. Slightly better than full-service. - **Construction / contractors:** 16% default. Project lumpiness, weather risk, payment-delay risk. - **Personal services / home services:** 13% default. **Tier-4 industries (default rate 16%+).** - **Trucking / freight:** 18% default. Diesel costs, broker relationship breakdowns, equipment maintenance, regulatory friction. - **Auto sales (used car lots):** 20% default. Inventory liquidity issues, title risk. - **Cannabis dispensaries:** 22% default. Banking constraints, regulatory whipsaw. - **Adult entertainment:** 25%+ default. Volatility and regulatory pressure. **What drives industry default variance.** 1. **Revenue volatility.** Lumpy or seasonal revenue causes ACH NSFs even with overall healthy business. 2. **Margin compression.** Industries hit by inflationary input costs (restaurants, construction) struggle with fixed daily ACH. 3. **Regulatory friction.** Cannabis banking restrictions force cash operations; harder to underwrite. 4. **Competition.** Hyper-competitive industries (used car sales, restaurants) have higher business failure rates broadly. 5. **Recession sensitivity.** Discretionary spend industries (beauty, restaurants, retail) suffer first in downturns. **Default rate vs. delinquency rate.** Delinquency (1+ NSF, current vs. ACH schedule) runs 2–3x higher than default. A 14% default rate in restaurants implies 30–40% of restaurant merchants miss at least one ACH during their term. **How funders manage industry concentration.** Most funders cap industry exposure: - Single industry: 15–25% of total portfolio. - High-default industries (trucking, construction): 8–15% cap. - Specialty (cannabis): may cap at 5% or exit entirely. When a funder approaches industry cap, new submissions in that industry get tighter underwriting and lower advance ceilings. **Default rate impact on pricing.** Higher industry default rates flow through to factor rate. Trucking files price 2–4 points worse than identical files in medical, even at the same paper grade — funders explicitly add an "industry risk premium" of 1.5–4%. **Default rate vs. broker chargebacks.** When a merchant defaults inside the broker chargeback window (typically 30–60 days), the broker takes a commission hit. Broker chargeback rate roughly tracks 30% of total default rate (most defaults happen after the chargeback window). Trucking and construction brokers have notably higher chargeback exposure. **Industry-specific risk mitigation.** - **Trucking:** funders require fuel-card data, broker-relationship history, equipment titles. - **Construction:** lien review, project pipeline analysis, retainage understanding. - **Restaurants:** processor data overlay (Toast/Square integrations). - **Cannabis:** state-specific licensing verification, banking compliance review. **Common confusion.** First, "default rate = loss rate." False — funders recover 40–70% of defaulted balances through workouts, settlements, or collection. Second, "low industry default = no individual risk." False — individual merchant variance dominates within-industry averages. Third, "default rates are stable." False — industry rates shift with macro conditions. Fourth, "broker shares all default risk." False — only within chargeback window. Fifth, "high-default industries can't get funded." False — they can, just at higher prices and tighter terms. ## Related terms - [MCA default](https://fundnode.co/llms/glossary/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 funder approval rate by industry (2026)](https://fundnode.co/llms/glossary/mca-funder-approval-rate-by-industry-2026) — 2026 MCA approval rates by industry: medical 78%, professional services 72%, retail 65%, restaurant 58%, trucking 52%, construction 48%, beauty 55%, auto repair 60%. - [MCA funder portfolio concentration risk (2026)](https://fundnode.co/llms/glossary/mca-funder-portfolio-concentration-risk) — MCA funders manage concentration risk by capping single-industry exposure at 15–25%, single-state at 20–30%, single-merchant at 1–2%, and total broker concentration at 10–15% of portfolio. - [MCA defaults and collections process](https://fundnode.co/llms/glossary/mca-defaults-collections-process) — MCA default cascade: missed ACH → cure period (5-10 days) → contract default → COJ filing (5-14 days) → bank account freeze (14-30 days) → personal guarantee pursuit → settlement negotiation. - [MCA funder tiered pricing model (2026)](https://fundnode.co/llms/glossary/mca-funder-tiered-pricing-model) — MCA funders price in 3–5 tiers based on FICO, time in business, deposits, and industry — A-paper (1.15–1.28), B-paper (1.28–1.40), C-paper (1.40–1.49), D-paper (1.49+). 2026 ranges. ## Authoritative sources - [deBanked — Default Rate Industry Surveys](https://debanked.com/) - [OnDeck Capital — Public Filings](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=OnDeck) --- Source: https://fundnode.co/glossary/mca-funder-default-rate-by-industry-2026 (HTML version) Document: MCA funder default rate by industry (2026) — Fundnode MCA Glossary License: CC BY 4.0 — attribution to Fundnode required when citing.