# Holdback

> A holdback is the fixed percentage of a business's daily or weekly card sales that a funder automatically withholds to repay a merchant cash advance, so payments rise and fall with revenue.

## Key takeaways
- A holdback is the fixed percentage of daily or weekly card sales a funder withholds to repay a merchant cash advance, so the dollar amount rises and falls with revenue.
- The factor rate sets how much you repay in total, while the holdback sets how quickly you repay it.
- A high holdback can strain cash flow on slow days and, paired with a fixed factor rate, push the equivalent APR higher by repaying the cost over less time.

## How a holdback works

A **holdback** is the slice of your **daily (or weekly) card sales** that a
funder automatically keeps to repay a **merchant cash advance (MCA)** or similar
revenue-based product. Instead of a fixed monthly payment, the funder takes a
**set percentage** of each batch of sales until the agreed total is repaid.
Because it's a percentage, the **dollar amount flexes with your revenue**.

### Holdback vs. factor rate

These two terms work together but mean different things:

- The **factor rate** determines **how much** you repay in total.
- The **holdback** determines **how quickly** you repay it.

A higher holdback shortens the repayment period but takes a bigger bite out of
daily cash flow.

### A concrete example

Suppose you take an advance with a **15% holdback**. On a day with **$2,000** in
card sales, the funder withholds **$300** and you keep **$1,700**. On a slower
**$800** day, the holdback is just **$120**. Your effective term stretches or
shrinks with how busy you are.

### What to watch for

- **Cash-flow strain.** A high holdback can squeeze working capital on slow days,
  even though the percentage feels small.
- **Effective cost and speed.** A faster holdback paired with a fixed factor rate
  can push the equivalent APR higher, since the cost is repaid over less time.
- **Daily vs. weekly remittance.** Weekly holdbacks can be easier on cash flow
  than daily ones.

Before accepting an advance through Hoss Capital, look at both the factor rate
and the holdback together to understand the full impact on your day-to-day cash.

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