First Position
First position in MCA refers to the funder holding the senior secured creditor status against a merchant's receivables — the first-filed UCC-1 lien holder, with priority over all subsequent funder claims in default scenarios.
Why This Matters
First-position deals carry the lowest credit risk and command the most competitive pricing. The senior position has first claim on receivables, first access to lockbox or collection structures, and first recovery in defaults. First-position factor rates run 1.20-1.40, terms 6-12 months. First-position approval typically requires no existing UCC liens against the merchant — clean filing record is the qualification. Most reputable MCA funders restrict deal acceptance to first-position only; specialty funders extend to second and third positions at premium pricing tiers.
Example
Merchant with no existing UCC filings approved for $75K first-position MCA at 1.28 factor, 9-month term, 14% holdback. Funder files UCC-1 securing receivables. If merchant subsequently takes second-position from another funder, the original funder retains priority — second-position recovers only after first position is fully paid in default scenarios.
Frequently Asked Questions
Frequently Asked Questions
What pricing premium does first position command?
First-position factor rates run 1.20-1.40 versus 1.30-1.50 for second-position and 1.45-1.70 for third-position+. First-position deals also access longer terms (9-12 months vs 4-8 for higher positions), reducing daily payment burden for the same funded amount.
How do funders ensure first-position status?
Pre-funding UCC search confirms no existing liens. UCC-1 filing immediately at funding establishes priority. Some funders require merchant covenant against subsequent UCC filings without consent. Continuous monitoring catches subsequent filings that would dilute first position.