Syndication
MCA syndication is the practice of dividing a single funded deal across multiple capital sources — typically a lead funder originating and servicing the deal while passive capital partners contribute portions of the principal in exchange for proportional return participation.
Why This Matters
Syndication enables funders to scale deal capacity beyond their own capital base. A funder with $5M deployable but interest in a $250K deal can syndicate $200K to capital partners while retaining $50K and the servicing rights. The lead funder handles underwriting, collection, and merchant relationship; syndicators receive their pro-rata share of factor rate returns. Syndication structures range from informal one-off arrangements to formal syndication funds investing across many MCA funders. Returns to syndicators typically run 15-30% annualized depending on portfolio mix and default experience.
Example
Funder originates $200K deal at 1.35 factor ($270K payback). Syndicates $150K to capital partner. Funder retains $50K position and servicing rights. Capital partner receives 75% of factor return ($52,500 of $70,000 spread less servicing fee). Funder earns servicing fee plus 25% factor return plus origination commission.
Frequently Asked Questions
Frequently Asked Questions
Why do funders syndicate deals?
Capital efficiency. Syndication lets funders book larger deals than their balance sheet supports while earning servicing fees and pro-rata factor returns. It also diversifies exposure — instead of concentrating capital in fewer large deals, funders spread across more deals.
What returns do MCA syndicators earn?
15-30% annualized typical, depending on portfolio quality, default rates, and fee structures. Top syndicators with disciplined underwriting partners can sustain 20-25% net returns. Riskier syndication pools may produce higher headline returns offset by elevated default losses.