What Is in a Merchant Cash Advance Offer?

A merchant cash advance offer is a short term sheet — usually one or two pages — that sets out the amount being advanced, the total dollar amount you will repay, how much is collected and how often, roughly how long collection should take, and the fees taken out at funding. Everything else lives in the agreement behind it.

What is in a merchant cash advance offer?

A merchant cash advance offer is a term sheet, not a contract. It exists so you can compare one funder against another before anyone signs anything, and on a well-written one every number you need sits on a single page. Five lines do almost all of the work:

• The amount advanced. The money that actually reaches your account, sometimes called the purchase price.
• The total payback. The full dollar figure the funder will collect, sometimes called the purchased amount or specified amount.
• The factor rate. The multiplier that connects the two — total payback divided by the amount advanced.
• The remittance. How much comes out, how often (daily or weekly), and whether it is a fixed debit or a true percentage of sales.
• The estimated term. How long the funder projects collection will take at your current sales volume.

Fees belong on that page too, and they are usually netted out of the wire rather than billed: an origination or underwriting fee, sometimes an ACH or program fee. Read them carefully, because they change the amount that lands in your account without changing the amount you repay. An offer showing $50,000 advanced with a $2,000 origination fee deposits $48,000 and still collects the full total payback. Our merchant cash advance calculator runs those figures against your own numbers, and the step-by-step walkthrough of how an advance works shows where in the process the offer is produced.

How to read the numbers on the offer sheet

Start at the total payback and work backwards. That single figure is the only cost number that cannot be reframed, because it does not move once you sign — not if sales climb, not if collection drags on for an extra four months. Every other number on the sheet is a description of how you get there.

The factor rate is simply that relationship expressed as a multiplier. If an offer advances $50,000 and collects $65,000, the factor rate is 1.3, because $65,000 divided by $50,000 is 1.3. It is not an interest rate and it does not compound, which is exactly why comparing a factor rate against a bank's annual rate tells you very little on its own. Our guide to what a factor rate is and how it works covers the arithmetic in full.

Then read the remittance line twice, because it determines whether the deal is survivable in a slow month. A true holdback takes an agreed percentage of each day's sales, so the payment shrinks when revenue does. A fixed daily or weekly ACH takes the same dollar amount regardless, which behaves like a loan payment right up until the week it does not fit. Our explainer on how holdback and reconciliation work sets out the difference, and how to compare funding offers side by side shows how to line two of these up honestly.

The terms behind the numbers that the offer sheet does not show

An offer sheet is deliberately short, and the provisions that decide what happens when things go wrong usually are not on it. They are in the agreement you receive once you accept, and they are worth asking about before you get that far rather than after:

• The reconciliation clause. On a fixed-debit deal, this is the provision that lets you ask for the payment to be adjusted down to match real sales. Ask how a request is made, what documentation is required, and how often it can be used.
• A personal guaranty or a performance guaranty. These are different. A performance guaranty typically makes you personally answerable for breaches such as diverting card sales, not for the business simply underperforming. A full personal guaranty goes further.
• A UCC-1 filing. Most funders file one against business assets. It is public, and other funders will see it.
• Events of default. Returned payments, changing your processor or bank account, or taking a second advance often appear on this list.
• Restrictions on additional financing. Many agreements prohibit taking another position while the advance is open — see what MCA stacking is for why that clause exists.

The practical move is to ask for the full agreement alongside the offer rather than after you accept it. A funder who will not send it until you commit has told you something useful. Our guide to reading a business funding agreement walks through the clauses that carry real risk, and the red flags worth walking away from covers the pressure tactics that tend to accompany a thin offer sheet.

What your state may require the offer to disclose

In a growing number of states, several of those line items are not a courtesy but a legal requirement. California's commercial financing disclosure law is the clearest example. As operative from January 1, 2024, it requires a provider to disclose a defined set of items at the time of extending a specific commercial financing offer and to obtain your signature on that disclosure before the transaction is consummated: the total amount of funds provided, the total dollar cost of the financing, the term or estimated term, the method, frequency and amount of payments, and a description of prepayment policies (California Financial Code § 22802).

That list is a useful checklist even outside California, because it is a reasonable description of what any honest offer should show you. Our state-by-state commercial financing disclosure guide covers which states require what and where the rules are heading next.

One more thing worth expecting: the offer you receive may be smaller than the amount you asked for. That is normal rather than a sign of trouble. In the Federal Reserve Banks' 2026 Small Business Credit Survey, 42% of applicants received the full amount of financing they sought, 36% received some or most of it, and 22% received none — so a partial offer is the single most common outcome after a full approval. The Broker Shop is a broker rather than a funder, which means the useful thing we do here is put one application in front of the funders whose guidelines you meet and let you read their offers against each other instead of one at a time. It is free to apply, and checking your options won't affect your credit score.

Frequently Asked Questions

Sources: California SB 1235 — Commercial Financing Disclosures (Cal. Fin. Code § 22802) (a provider must disclose the total amount of funds provided, the total dollar cost, the term or estimated term, the method, frequency and amount of payments, and prepayment policies at the time of extending a specific commercial financing offer, and obtain the recipient’s signature before consummating the transaction) · Federal Reserve Banks — 2026 Report on Employer Firms, Small Business Credit Survey (42% of applicants received the full amount of financing they sought, 36% received some or most, and 22% received none).