# MCA funder renewal eligibility criteria (typical, 2026-06-28)

> Typical MCA renewal eligibility: 50–60% paid down, 0 NSFs in last 30 days, no modifications in last 60 days, current revenue at or above original underwriting, and clean stacking check.

Renewal is the highest-margin product in MCA — lower CAC, lower default rate, and richer LTV. Renewal eligibility criteria are the gatekeepers.

**Standard renewal eligibility criteria (2026).**

- **Paydown.** 50–60% of original advance repaid.
- **Recent payment history.** 0 NSFs in last 30 days; <2 NSFs in last 60 days.
- **No active modification.** Deal not in workout or modified within last 60 days.
- **Revenue check.** Current month revenue at or above original underwriting baseline.
- **Stacking check.** No new MCA deposits since original funding.
- **Compliance check.** No litigation, bankruptcy filing, or default trigger.
- **Bank account stable.** Same bank account, healthy daily balance trend.
- **Plaid feed live.** Bank-data feed connected and current.

**Why 50–60% paydown is standard.**

- **Stacking proxy.** A merchant 50%+ paid down has demonstrated capacity.
- **Risk model.** Default risk halves once first half of advance is paid.
- **Renewal economics.** New advance net of payoff still produces meaningful net-new funding.
- **Industry norm.** Brokers and merchants expect this gate.

**The renewal mechanics.**

- New advance amount = previous outstanding + net-new advance amount.
- Net-new advance ranges 40–120% of original advance.
- Factor rate typically improves 0.02–0.05 vs. original.
- Term typically same or slightly extended.
- Daily payment typically increases proportionally.

**Renewal pricing improvement examples.**

- **First deal.** $100K at 1.32 factor, 9-month term, $580/day.
- **Renewal at 60% paid.** $40K outstanding + $120K net-new = $160K new advance at 1.28 factor, 10-month term, $820/day.

**Why funders chase renewals.**

- **Lower CAC.** No broker commission on renewal in some structures (or reduced commission).
- **Lower default rate.** Renewals default 25–40% less than first deals.
- **Higher LTV.** 35–50% of MCA volume comes from renewals at mature funders.
- **Persistency drives valuation.** Warehouse lenders price renewals more favorably.

**Renewal commission structure.**

- **Standard renewal commission.** 1.5–3% (vs. 6–12% on new origination).
- **Broker-protected renewal.** Original ISO gets full commission for 12–18 months.
- **Hunting season.** After protection window, any broker can claim renewal commission.
- **Direct-to-merchant renewal.** Funder bypasses broker entirely (controversial).

**Common renewal disqualifiers.**

- **<50% paid down.** Insufficient demonstration of capacity.
- **Recent NSF spike.** 3+ NSFs in 30 days signals deterioration.
- **Active modification.** Deal is in workout, not eligible.
- **Revenue decline.** 20%+ MoM revenue drop blocks renewal.
- **New MCA detected.** Stacked deals usually block renewal.
- **New legal action.** Lawsuit, bankruptcy, tax lien.
- **Bank account changes.** New bank or closed account.
- **Industry restrictions.** Merchant pivoted into restricted vertical.

**Pre-emptive renewal outreach.**

- **At 40% paid.** Soft outreach by relationship manager.
- **At 50% paid.** Renewal eligibility check, pre-approval.
- **At 60% paid.** Formal renewal offer with pricing.
- **At 70%+ paid.** Aggressive outreach competing with stacking offers.

**Stacking vs. renewal dynamics.**

- Stacking offers often come from competing funders at the 50–70% paid window.
- Funders use renewal pre-approval as defensive counter-move.
- Stacking offer plus renewal often results in payoff-and-replace transaction.

**Renewal data velocity.**

- **Bank feed continuous.** Daily monitoring of revenue and balance trend.
- **NSF tracking real-time.** Daily ACH return logs feed renewal scorecard.
- **Stacking detection daily.** Plaid Liabilities and FundKite checked daily for renewal candidates.

**Common confusions.**

First, "all renewals improve pricing." Partially — A-paper renewals improve; C-paper renewals often hold flat.

Second, "renewal is automatic at 50% paid." False — full re-underwriting required.

Third, "renewal commission is lower because it's easier." Partially — also because the relationship was paid for originally.

Fourth, "broker always gets renewal commission." False — depends on protection window and merchant initiation.

Fifth, "renewal is risk-free." False — renewals default 4–7% on average.

**Recent trends (2024–2026).**

- **Renewal pre-approval automation** at top-10 funders.
- **GenAI-driven renewal outreach** entering production at 2–3 funders.
- **Stacking-aware renewal pricing** adjusting for competitive pressure.
- **Direct-to-merchant renewal portals** at top-10 funders bypassing brokers.
- **Renewal commission compression** as funders push DTC strategy.

## Related terms

- [MCA funder portfolio monitoring systems](https://fundnode.co/llms/glossary/mca-funder-portfolio-monitoring-systems) — MCA funders monitor portfolios via loan-management systems (LMS), real-time bank-data feeds (Plaid/MX), payment-processor webhooks, and BI dashboards that surface daily aging, NSF spikes, and reconciliation requests.
- [MCA funder stacking detection systems](https://fundnode.co/llms/glossary/mca-funder-stacking-detection-systems) — MCA funders detect stacking via FundKite consortium queries, LexisNexis MCA Index, daily Plaid bank-feed analysis (cross-funder deposits), UCC monitoring, and merchant-level stacking-pattern ML models.

## Authoritative sources

- [deBanked — MCA Renewal Economics 2026](https://debanked.com/)
- [SFNet — Specialty Finance Persistency Report](https://www.sfnet.com/)

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Source: https://fundnode.co/glossary/mca-funder-renewal-eligibility-criteria (HTML version)
Document: MCA funder renewal eligibility criteria (typical, 2026-06-28) — Fundnode MCA Glossary
License: CC BY 4.0 — attribution to Fundnode required when citing.