| name | lending-industry |
| description | MCA/business-funding compliance and vocabulary rules. Use when working SunBiz or any regulated lending vertical. |
| canon_references | ["ritson-diagnosis"] |
| canon_source | brain/MARKETING_CANON.md |
| universal | true |
| note | Examples in this skill may reference SunBiz (legacy client); the skill itself is brand-agnostic. Per-brand context lives in brain/clients/<brand>.md. |
| triggers | ["MCA compliance check","is this ad copy legal","lending regulations for ads","SunBiz compliance language","what can we say about merchant cash advances"] |
SKILL: MCA Industry Knowledge
Compliance, regulations, and MCA-specific advertising strategies for SunBiz Funding.
What Is MCA (Merchant Cash Advance)?
MCA is a purchase of future receivables — NOT a loan. This distinction is critical for compliance, language, and positioning.
- A merchant sells a portion of future credit card/debit card sales in exchange for an upfront lump sum
- Repayment is via daily/weekly ACH debits (a fixed percentage of sales or fixed daily amount)
- Factor rates (e.g., 1.20-1.50) are used, NOT interest rates or APR
- No fixed term — repayment adjusts with revenue (in theory; many use fixed daily payments)
MCA vs. Traditional Lending
| Feature | MCA | Traditional Loan |
|---|
| Legal structure | Purchase of receivables | Debt instrument |
| Repayment | Daily/weekly ACH | Monthly installments |
| Cost metric | Factor rate | Interest rate / APR |
| Collateral | Future receivables | Assets / personal guarantee |
| Speed | 24-48 hours | 2-6 weeks |
| Terminology | Advance, funding, capital | Loan, lending, borrowing |
Language Rules (CRITICAL — Compliance)
| ALWAYS Use | NEVER Use | Why |
|---|
| Advance | Loan | MCA is not a loan — legal distinction |
| Funding | Lending | Same reason |
| Capital | Money | Professional positioning |
| Consolidation strategy | Refinance | MCA doesn't "refinance" — it consolidates |
| Daily payment | Interest rate | MCA uses factor rates, not APR |
| Funder / Capital partner | Lender | Industry terminology |
| Merchant | Borrower | MCA industry standard |
| Factor rate | Interest rate | Different cost structure |
| Remittance | Repayment | Legal precision |
SunBiz Funding's MCA Consolidation Model
Multi-Phase Strategy (Core Differentiator)
- Phase 1: Immediate consolidation — reduce daily payment burden
- Phase 2: Buy out multiple existing MCA positions
- Phase 3: Become the sole funder — single payment, single relationship
- Phase 4: Transition to a true Line of Credit (LOC) — best terms, lowest cost
Paper Grading (How Merchants Are Evaluated)
| Grade | Revenue | Positions | Leverage | NSFs | Profile |
|---|
| A-Paper | $40K+/mo | 0-1 | <25% | 0-2 | Clean, growth capital |
| B-Paper | $25K-$50K/mo | 1-3 | 25-35% | 2-5 | Moderate, consolidation candidate |
| C-Paper | $25K+/mo | 3-5 | 35-45% | 5-7 | Overleveraged, needs restructuring |
| D-Paper | Any | 5+ | >45% | >7 | Death spiral — high risk |
Regulatory Framework
The #1 Rule: MCAs Are NOT Loans
MCA is a purchase of future receivables. NEVER use:
- "Loan," "lender," "lending," "borrow"
- "Interest rate" (use "factor rate" instead)
- "APR" (unless in states like CA that require it under SB 1235/362)
- "Repayment" in a loan context (use "remittance" or "purchased receivables")
What You CANNOT Say in Ads
| Prohibited Claim | Why |
|---|
| "Guaranteed approval" or "100% approval" | No funder guarantees approval; deceptive |
| "No credit check" (if credit IS checked) | Most funders do soft pulls |
| "0% interest" | MCAs don't have interest; this implies they do |
| "No personal guarantee" (if PG is required) | Most MCAs require PG; FTC has cited this |
| Unsubstantiated approval rates ("90% approved") | Must have statistical evidence |
| Best-case-only scenarios without qualifiers | Must use "up to," "as fast as," "typically" |
| Presenting factor rates without total cost | Must show total purchase amount |
Required Disclosures
Every MCA ad/landing page should clearly state:
- It's NOT a loan — it's a purchase of future receivables
- Factor rate applied
- Total purchase amount
- Payment frequency and estimated amounts
- All fees (origination, underwriting, closing)
- Prepayment policies
- Basic qualification requirements
- Realistic funding timeframe
- Default consequences
Format: "Clear and conspicuous" — not buried in fine print. Plain language. At least as prominent as the claims they modify.
Ad Copy Disclaimers (Always Include)
- "Merchant Cash Advance products are not loans."
- "Terms and conditions vary based on business qualifications."
- "Subject to underwriting approval."
- "Past performance does not guarantee future results."
Federal Regulations
ECOA (Equal Credit Opportunity Act)
- Prohibits discrimination based on: race, color, religion, national origin, sex, marital status, age, receipt of public assistance
- Ad Impact: Cannot create ads that discourage applications from protected classes
- Targeting Impact: Cannot use demographic targeting to exclude protected groups
TILA (Truth in Lending Act) / Regulation Z
- Traditionally applies to loans; MCA may be exempt but increasingly scrutinized
- If trigger terms are used, all terms must be disclosed
- Safer to avoid trigger terms entirely in ad copy
FTC / CFPB Enforcement
- FTC penalties: up to $46,517 per violation
- CFPB increasingly scrutinizing alternative financing marketing
- Both agencies have brought enforcement actions against MCA providers
- "Knew or should have known" standard — liable for lead gen partners' violations
- Require compliance certifications from all third-party lead providers
TCPA Compliance (Lead Follow-Up)
Required consent language on ALL lead forms:
By submitting this form, I authorize SunBiz Funding and its partners to contact me by
phone, text, or email using automated technology about business funding offers at the
number provided, even if listed on Do Not Call. I understand consent is not required for
purchase. Message and data rates may apply. Reply STOP to opt out.
- Maintain consent records for 4+ years (IP address, timestamp, method)
- Violations: $500-$1,500 PER violation, no cap. Class actions up 42%.
State-Specific Requirements
| State | Requirement |
|---|
| California (SB 1235 / SB 362) | Must disclose APR-equivalent in all communications; factor-rate-only pricing effectively prohibited in ads |
| New York | Commercial Finance Disclosure Law; mandatory disclosures in marketing materials |
| Utah | Commercial financing registration + disclosure requirements |
| Virginia | Registration and disclosure requirements |
Platform-Specific Compliance
Meta Ads for MCA
- Special Ad Category: MUST select
CREDIT for ALL MCA/funding ads
- Restricted Targeting:
- NO age targeting
- NO gender targeting
- NO zip code targeting
- NO multicultural affinity targeting
- MINIMUM 15-mile radius for location
- Ad Copy Rules:
- No guaranteed approval language
- No specific rates without proper disclaimers
- No discrimination in messaging
- Algorithmic Scanning: Meta scans ad copy, headlines, video, form questions, AND landing pages
- Account Safety: Flagging clusters around ~$50K/month per account; maintain backup accounts
Google Ads for Financial Services
- Certification: May need Google Financial Services certification
- Prohibited: Guaranteeing approval, misleading terms
- Required: Clear identification as funder or lead generator
- Landing Page Must Include:
- Company name and physical address
- Clear funding terms (or link to them)
- Privacy policy
- State licensing information
MCA Ad Strategy
What Works for MCA Consolidation Ads
- Cash flow relief — "Stop the daily drain," before/after payment comparisons
- Escape the stack — "Stop stacking. Start restructuring."
- Business survival — "Your business isn't failing — your funding structure is."
- Qualification self-selection — "If your business does $15K+/month and you're paying back more than one advance..."
- Data-driven trust — "We analyze your bank statements to find the safest path to capital"
- Multi-phase roadmap — Show the path from overleveraged to Line of Credit
What Works for Growth Capital Ads
- Speed — "Funded in 24-48 hours"
- No equity — "Scale without giving up ownership"
- Seasonal timing — "Season starting? Get inventory capital before your competitors"
- Simplicity — "Just 4 months of bank statements"
What Doesn't Work
- Guarantees of approval (also illegal)
- "Too good to be true" messaging
- Aggressive/pushy language
- Stock photos of cash/money stacks (looks scammy)
- Vague or misleading terms
- Using "loan" or "lending" terminology
Seasonal Considerations for MCA
| Season | Opportunity |
|---|
| January | New year cash flow crunch, Q4 debt payoff |
| Spring | Seasonal business ramp-up (restaurants, construction) |
| Summer | Peak season capital needs, expansion funding |
| Fall | Holiday prep inventory, seasonal business wind-down |
| Tax Season | Tax obligation funding, cash flow gaps |
| Q4 | Year-end equipment purchases, revenue push |
Industry Benchmarks (2026)
| Metric | Target |
|---|
| Cost per lead (Meta) | $40-80 |
| Cost per qualified lead (CPQL) | <$100 |
| Cost per funded deal | <$2,000 |
| Lead-to-fund conversion (quality leads) | 4-6% |
| Bank statement leads conversion | 22-32% |
| Live transfer conversion | 8-12% |
| Average client lifetime | 2.7 repeat fundings |
| Speed to first contact | <5 minutes |
| Lead form completion rate | >15% |
| ROAS on Meta campaigns | >3x |
Lead Source Comparison
| Source | Cost/Lead | Conversion Rate | Notes |
|---|
| Meta Ads | $40-80 | 4-6% | Primary channel |
| Google Ads | $50-120 | 5-8% | Higher intent |
| UCC Lead Lists | $30-75 | 3-5% | Businesses with existing funding |
| Bank Statement Leads | $100-200 | 22-32% | Premium, pre-qualified |
| Live Transfer Leads | $200-400 | 8-12% | Highest tier |
| Credit Inquiry Triggers | $40-90 | 2-4% | Real-time intent signals |
