How Does Merchant Cash Advance Deal Syndication Work?

Merchant Cash Advance Deal Syndication is when a funder gets investors or funding companies to co-fund a merchant cash advance deal. A syndicated merchant cash advance deal can be funded partially or entirely by investors. Investors are sometimes referred to as participants. There usually is one funding company responsible for structuring and administering the syndicated deal. The funding company administering the deal is the company responsible for collecting the daily remittance from the merchant and distributing the funds to the participating parties.

For example, a restaurant (merchant) is looking for $100,000 for 12% interest ($120,000 payback) but ABC Funding Company only has $60,000. However, ABC Funding Company believes the merchant has the credit to warrant the $100,000 deal. ABC Funding Company will need to raise $40,000 to fund the deal. To raise the $40,000, ABC Funding Company will offer the same payback percentage to investors ($40,000 to get back $44,800 or 12%). It may take ABC Funding Company more than one investor to raise the $40,000.

For the opportunity to participate in the deal that carries 12% interest, ABC Funding Company will charge the investor(s) a management fee to help collect and disburse the funds when it obtains remittance from the merchant.

Deal syndication is the next feature we are working on to enhance MCA Suite. With the deal syndication module, MCA Suite will help funding companies collect and allocate daily remittance and distribute proceeds to their investors. We welcome our current and potential customers to provide continued input on features to better support our product.