Merchant Cash Advance Contract Review Checklist
A plain-English review checklist for the parts of an MCA contract that most often create cash-flow or legal surprises.
Short answer
A merchant cash advance contract review should check the funded amount, net funding, factor rate, total payback, payment schedule, reconciliation rights, default triggers, personal guarantee, UCC filing, stacking restrictions, fees, payoff terms, and bank-account rules. Review these terms before signing because daily ACH obligations and default clauses can become expensive quickly.
Key takeaways
- Confirm both gross funded amount and net cash received after fees.
- Calculate total payback and daily cash impact before signing.
- Read default, bank-account, and stacking clauses carefully.
- This checklist is educational and does not replace advice from a qualified attorney.
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Money terms to verify
The first review pass should translate the contract into dollars and dates. If the agreement does not clearly show how much cash you receive, how much the funder collects, and when debits happen, pause before signing.
| Term | What to confirm |
|---|---|
| Funded amount | Gross advance before fees. |
| Net amount | Cash you actually receive after deductions. |
| Factor rate | Multiplier used to calculate total payback. |
| Total payback / RTR | Total amount the funder will collect. |
| Payment amount | Daily, weekly, or sales-based payment. |
| Payment start date | First debit date. |
| Estimated term | Expected number of payments. |
Operating clauses that can create problems
- Bank account change restrictions.
- Requirement to maintain a minimum bank balance.
- Restrictions on taking additional financing.
- Processor or card-split requirements.
- Reconciliation request process if revenue drops.
- Reporting requirements for bank statements or sales data.
Default and enforcement clauses
Default language deserves slow reading. Some contracts treat missed payments, blocked ACH debits, changed bank accounts, additional financing, or inaccurate application information as events of default. Once default is triggered, the funder may accelerate the balance or add fees.
- What exactly counts as default?
- Is there a cure period?
- What fees are added after default?
- Does the balance accelerate immediately?
- Is there a personal guarantee?
- Does the contract include venue, arbitration, confession-of-judgment, or collection-cost language?
Payoff, renewal, and reconciliation terms
Do not assume early payoff reduces cost. Many MCA agreements require the full total payback even if the advance is paid early. If a salesperson mentions an early-payoff discount, ask for the exact term in writing.
| Question | Why it matters |
|---|---|
| Is there an early-payoff discount? | Determines whether paying early saves money. |
| How is payoff requested? | Affects refinance or consolidation timing. |
| Can daily payments be reconciled? | Matters if sales drop. |
| When are renewals offered? | Prevents renewing too early out of pressure. |
| Will a UCC be filed? | Affects future financing and sale of business. |
MCA contract review checklist
- Calculate total payback from funded amount and factor rate.
- Confirm net cash received after all fees.
- Check daily or weekly payment amount and start date.
- Review reconciliation rights and documentation requirements.
- Review default triggers and cure periods.
- Check personal guarantee and owner liability language.
- Check UCC filing and release language.
- Check restrictions on additional financing or bank-account changes.
- Confirm early-payoff or renewal terms in writing.
- Save a clean copy of the signed contract.
Common questions
Should an attorney review an MCA contract?
If the amount is material to your business or the terms are unclear, a qualified attorney can help review default, guarantee, venue, and enforcement language.
What is the biggest number to check in an MCA contract?
Total payback or RTR is usually the most important number because it shows what the funder expects to collect.
Can I rely on the salesperson's explanation?
Use the written contract as the source of truth. Ask for any promised discount, reconciliation right, or renewal term to be written into the agreement.
Keep your MCA details in one place
FundingTracker organizes contracts, expected payments, actual bank debits, balances, documents, payoff dates, and cash-flow alerts across every active advance.