What the daily holdback percentage means on an MCA contract
Who this page is for: owners who want to know why a fixed amount leaves their account each day, and brokers who explain it to clients.
Reviewed by the Afterfirst Editorial TeamLast reviewed 4 minute read
How does a split holdback work?
A split holdback takes the agreed share out of each card batch. The rest goes to the business account.
If the holdback is 10 percent and the day's card sales are $3,000, the funder gets $300 and the business gets $2,700. On a $1,500 day, the funder gets $150. Collection rises and falls with sales automatically.
Offers with different holdbacks can sit side by side on the comparison sheet. A second position adds a second holdback on top of the first.
Splits usually need a partner card processor or a lockbox. That is one reason fewer funders offer them now.
Fixed ACH remittance and the daily holdback percentage
A fixed ACH remittance is a set daily or weekly debit. The funder works it out from the holdback percentage and average sales.
If average daily receivables are $3,000 and the holdback is 10 percent, the funder may set a fixed debit of $300. That number stays the same on slow days and busy days alike.
| Method | Slow day ($1,500 in sales) | Busy day ($4,500 in sales) |
|---|---|---|
| 10% split | $150 collected | $450 collected |
| Fixed debit based on $3,000 average | $300 collected | $300 collected |
Figures are illustrative.
How do you check whether a fixed debit still matches the holdback?
Multiply the holdback percentage by recent daily sales. Then compare the result with the fixed debit.
If the debit is well above that figure, the account is paying more than the agreed share.
Average daily receivables from one month
Add the receivables deposited over a recent month and divide by the business days in that month. Use true receivables, not transfers.
Losing a big customer while the debit stays put
If a business lost a large customer, average receivables drop while the fixed debit stays put. The gap between the two grows each week.
Holdback, new average and current debit on one page
Write down the holdback percentage, the new average sales and the share that results. Put it next to the current debit. That page becomes the core of a reconciliation request.
Ten percent of $2,000 a day
At a 10 percent holdback and new average daily receivables of $2,000, the agreed share is $200. A fixed debit of $300 is $100 a day above it.
The split holdback under the same drop
On a split holdback the collected share falls with the new average without any request. That difference is why the contract type matters when a customer leaves.
Where reconciliation comes in
A fixed debit makes reconciliation important. When sales drop, the debit can drift above the real holdback share. Reconciliation is the process for bringing the debit back in line with actual receivables. Without it, a fixed debit acts like a set payment regardless of sales. The reconciliation guide covers how to request one.
Holdback questions
Owners trying to understand their daily debit usually ask these.
What is a typical merchant cash advance holdback percentage?
Holdback percentages vary by funder, file and position, and every funder sets its own. Later positions and riskier files tend to carry higher percentages. The percentage is stated in the contract as the specified percentage.
Is the holdback the same as the factor rate?
No, the holdback is the share of receivables collected, while the factor rate sets the total amount owed. A higher holdback collects sooner; a higher factor costs more. Both appear in the contract.
Can I change from a fixed debit to a split holdback?
Some funders allow changes and many do not, since a split requires a processing arrangement. Ask before signing if a split matters to you. After signing, the contract terms control.
Sources
- For variable payments, New York Financial Services Law section 803 requires the provider to explain how payments are worked out from expected sales (NYSenate.gov, fetched 2026-09-24). In a New York disclosure, that is where a split based on a daily holdback percentage is explained.
Afterfirst is not a lender; all offers are subject to funder underwriting.
Cost, credit, speed and stacking
- Cost
- The holdback sets the pace of repayment, not the total. The payback amount on the offer is still the cost.
- Credit
- A holdback clause says nothing about credit steps. Ask the funder about those on their own.
- Speed
- No timeline is promised. A split holdback moves with sales, so slow weeks stretch the payback.
- Stacking
- Two holdbacks can take a large bite of each deposit. Add them up before you accept another position.
Send one file.
See what fits.
Next step: To see how your debit and daily holdback percentage were set, email the contract to info@afterfirstmca.com with account numbers removed. We will show the math.
Or write to the desk at info@afterfirstmca.com