How does merchant cash advance repayment actually work?

A split or holdback takes an agreed percentage of every card batch — say 12% — before the rest reaches you. Sell less, pay less. The term stretches or shortens with trade.

A fixed ACH debits a set amount from your account on a schedule, usually every business day or every week, regardless of what you sold. It is simpler to administer, which is why it now dominates.

Most contracts sold as revenue-based are the second kind with a reconciliation clause bolted on: you can apply to have the debit adjusted if revenue falls. Whether that adjustment is automatic or discretionary is the single most important sentence in the agreement.

Whether reconciliation is a right or a request. A clause that says the funder 'may' adjust is not the same as one that says it 'shall' on evidence of a revenue decline.

What evidence triggers it, and how long the funder has to respond. A thirty-day review window is of no use in a week when payroll is due.

Whether the debit is daily or weekly. Weekly is materially easier on cash flow for a business with uneven day-to-day revenue, and it is often available simply by asking.

What happens to the debit on days you are closed. Fixed ACH keeps pulling through holidays and shutdowns unless the contract says otherwise.

The factor rate is fixed, so the total you repay does not change with the structure. What changes is when it leaves your account, and that is what determines whether the advance is survivable.

A fixed daily debit on a seasonal business is the classic failure: the amount that was comfortable in October is the amount that closes you in February.

If your revenue genuinely moves month to month, a true holdback or a weekly debit with real reconciliation is worth more than a slightly lower factor rate.