Specified Percentage
The specified percentage in MCA contracts is the percentage of merchant revenue purchased by the funder — typically 8-25% of card transactions or daily revenue — establishing the holdback rate determining payment scale relative to revenue.
Why This Matters
Specified percentage is the operational definition of MCA holdback. A merchant with 15% specified percentage and $10,000 daily revenue would pay $1,500 per business day to the funder. The percentage is calibrated to produce reasonable RTI (Recovery Time Indicator) — typical 6-month RTI suggests specified percentage roughly matching the inverse of average daily revenue × business days per month. Higher specified percentages create faster repayment and higher effective cost; lower percentages create slower repayment and lower effective cost. PSA documents specify both the percentage and the revenue base it applies to.
Frequently Asked Questions
Frequently Asked Questions
What's a typical MCA specified percentage?
8-25% of daily card revenue or daily total revenue, depending on funder, deal structure, and merchant profile. Higher percentages typical for shorter-term aggressive structures; lower percentages typical for longer-term standard structures. Specific percentage calibrated to deal size, factor rate, and target repayment timeframe.
Can MCA specified percentages be modified during the advance?
Through reconciliation requests when revenue declines below projections. The merchant may request percentage adjustment based on revenue documentation; funder reviews and adjusts to maintain reasonable payment scale relative to actual revenue. Reconciliation is the contractual mechanism for percentage modification mid-advance.