The holdback (or retrieval) rate determines how much of your daily sales go toward repayment.
How Holdback Works: Each day, a percentage of your credit card sales is automatically deducted for repayment.
Example:
- ●Holdback rate: 15%
- ●Daily card sales: $2,000
- ●Daily payment: $300
Typical Holdback Ranges:
- ●Low: 5-10% (easier on cash flow, slower payoff)
- ●Standard: 10-15% (balanced)
- ●High: 15-20% (tighter cash flow, faster payoff)
Impact on Your Business: The holdback affects daily cash flow:
- ●10% holdback on $3,000/day = $300/day = ~$9,000/month
- ●20% holdback on $3,000/day = $600/day = ~$18,000/month
Calculating Sustainability: Before accepting, calculate:
- ●Average daily card sales
- ●Daily payment at proposed holdback
- ●Monthly total payments
- ●Remaining cash after payment
Rule of thumb: If holdback + existing expenses > 90% of revenue, reconsider.
Negotiating Holdback: You may be able to negotiate:
- ●Lower holdback = longer term, same total cost
- ●Higher holdback = faster payoff, frees you sooner
- ●Some flexibility during slow seasons
Variable vs Fixed: True MCAs have variable daily payments. Some products labeled "MCA" have fixed daily payments—understand which you're getting.