Term Sheet
A term sheet is the funder-issued offer document specifying the MCA deal structure — advance amount, factor rate, holdback rate, payment frequency, term length, fees, and stipulations — provided to the merchant for review and acceptance prior to contract execution.
Why This Matters
The term sheet is the conversion-critical document in the MCA sales cycle. A well-structured term sheet presents pricing transparently, addresses likely merchant questions preemptively, and includes a clear acceptance path. Common term sheet elements: advance amount (gross funded), purchase price (advance minus origination fee), factor rate, total payback, holdback percentage, daily/weekly payment, expected term, fees breakdown, and stipulations required for funding. Best-in-class MCA shops structure term sheets to maximize merchant clarity and minimize sales friction at the offer stage.
Frequently Asked Questions
Frequently Asked Questions
What information must an MCA term sheet include?
Advance amount, purchase price, factor rate, total payback, holdback percentage, payment amount and frequency, fees breakdown, stipulations for funding, and disclosure required by applicable state law (NY CFDL, CA CFDL, etc.).
How long is an MCA term sheet typically valid?
Most term sheets are valid 5-10 business days from issuance. Short validity windows protect funders from rate changes and merchant deterioration risk. Longer windows occasionally apply for complex commercial real estate or specialty deals.