- 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.
Frequently asked
How is a holdback different from a factor rate? +
They measure different things. The factor rate sets the total amount you'll repay, while the holdback sets how fast you repay it — the share of each day's sales that goes to the funder until the advance is paid off.
What's a typical holdback percentage? +
Holdbacks commonly run from around 5% to 20% of daily card sales, depending on the funder, your revenue, and the size of the advance. The remaining sales stay in your account.
Does the holdback amount change day to day? +
Yes. Because it's a percentage of sales, the dollar amount withheld is larger on strong sales days and smaller on slow days, even though the percentage stays fixed.
Last updated: June 2026