# MCA funder discount typical by tenure

> Tenure-based discounts: 1st-time merchants pay book factor (1.30-1.40), 2nd renewal gets 3-5 bps off, 3rd+ renewals get 8-15 bps off, 5+ year merchants get 15-25 bps off.

MCA funder discount by tenure is the empirical pricing improvement merchants receive as their relationship with a single funder lengthens. Tenure discounts reward demonstrated repayment performance and reduce churn to competing funders. Updated 2026-06-29.

**Discount schedule by renewal count.**
- 1st funding (new merchant): book factor, no discount. Typical 1.28-1.42 depending on grade.
- 2nd funding (1st renewal): 3-5 bps factor improvement. A 1.32 becomes 1.28-1.29.
- 3rd-4th funding: 8-12 bps improvement from book. 1.32 becomes 1.20-1.24.
- 5th+ funding (typically 18-24 months tenure): 15-25 bps improvement. 1.32 becomes 1.07-1.17.
- 10+ funding (3+ years tenure): often custom-priced with relationship manager involvement.

**Discount schedule by elapsed tenure.**
- 0-6 months: 0 bps (no tenure premium yet).
- 6-12 months: 2-4 bps.
- 12-24 months: 5-10 bps.
- 24-36 months: 10-15 bps.
- 36-60 months: 15-20 bps.
- 60+ months: 20-30 bps.

**Funder economics of tenure discount.**
The discount looks expensive but the math favors the funder:
- New origination CAC: $400-800 in ISO commission + $200-400 in underwriting cost = $600-1,200.
- Renewal CAC: $200-400 in ISO commission + $50-100 in re-underwriting = $250-500.
- Net savings per renewal: $350-700.
- A 10 bps factor discount on a $50K advance is $50 of foregone NIM.
- The funder still nets $300-650 vs new origination.

**Tenure discount tiers by funder.**
Sophisticated funders publish internal tenure-pricing matrices:
- Credibly: 4 tiers (Standard, Preferred, Premier, Elite) with 5/10/15/20 bps progressive discount.
- OnDeck/Enova: 3 tiers (Standard, Plus, Elite) with 8/15/25 bps progression plus rate-lock for 12 months on Elite.
- Bluevine: 5 tiers driven by combined LOC + MCA volume, 3-20 bps progression.
- Forward Financing: 3 tiers with merchant-success-manager assignment at Tier 2+.
- PIRS Capital: 3 tiers focused on B/C-paper retention.

**Communication mechanics.**
Tier upgrades are communicated via:
- Email at upgrade (typically auto-triggered).
- ISO portal flag visible to placement agents.
- Renewal offer letter cites tier ("As a Premier merchant, you qualify for...").
- Dedicated phone line or relationship manager at Premier/Elite.

**Eligibility conditions.**
Tenure discount is NOT automatic. Common disqualifiers:
- Any default or 30+ day late in last 24 months.
- Stacking activity (taking another funder's advance during current term).
- Reconciliation request granted (some funders count this as performance issue, controversial).
- Bank statement deterioration year-over-year.

**Trend 2026.**
Tenure-discount automation is increasingly common at top-25 funders. Three patterns:
1. Pre-approved renewal offers with tier-specific pricing emailed at 45% paydown.
2. ISO portal that displays merchant tier and tier-specific factor band before offer is generated.
3. Tier preservation across product lines (Bluevine: MCA tenure carries to LOC pricing).

Smaller funders often manage tenure discounts manually through underwriter discretion, which leads to inconsistency and merchant complaints about being charged book on a renewal they expected to be discounted.

**Comparison to traditional lending.**
Banks rarely give explicit tenure discounts on term loans — pricing is fully risk-based. MCAs use tenure discount because:
- Merchant switching cost is low (any ISO can place with any funder).
- Renewal NIM is structurally cheaper than new NIM.
- Behavioral data on the specific merchant is more predictive than credit-bureau data.

**Common confusion.** First, "tenure discount is automatic" — it requires clean performance and is often gated by tier rules. Second, "tenure discount applies across funders" — it does not; switching to a new funder resets you to book. Third, "longer tenure always means lower factor" — incremental discount diminishes after Tier 3-4 because risk-pricing dominates.

## 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.
- [MCA funder renewal cycle typical by paper grade](https://fundnode.co/llms/glossary/mca-funder-renewal-cycle-typical-by-paper-grade) — Renewal cadence varies sharply by paper grade: A-paper renews every 6-9 months at 60-75% rates, B-paper every 4-6 months at 40-55%, C/D-paper every 3-4 months at 20-35%.
- [MCA funder merchant retention strategies](https://fundnode.co/llms/glossary/mca-funder-merchant-retention-strategies) — Funders retain merchants via tenure discounts, pre-approved renewals, dedicated relationship managers, multi-product cross-sell, and tier-based service differentiation.
- [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.

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Document: MCA funder discount typical by tenure — Fundnode MCA Glossary
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