lending-industry

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.

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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

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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

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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

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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:

1. It's NOT a loan — it's a purchase of future receivables
2. Factor rate applied
3. Total purchase amount
4. Payment frequency and estimated amounts
5. All fees (origination, underwriting, closing)
6. Prepayment policies
7. Basic qualification requirements
8. Realistic funding timeframe
9. 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

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Platform-Specific Compliance

Meta Ads for MCA

1. Special Ad Category: MUST select CREDIT for ALL MCA/funding ads
2. Restricted Targeting:
   • NO age targeting
   • NO gender targeting
   • NO zip code targeting
   • NO multicultural affinity targeting
   • MINIMUM 15-mile radius for location
3. Ad Copy Rules:
   • No guaranteed approval language
   • No specific rates without proper disclaimers
   • No discrimination in messaging
4. Algorithmic Scanning: Meta scans ad copy, headlines, video, form questions, AND landing pages
5. Account Safety: Flagging clusters around ~$50K/month per account; maintain backup accounts

Google Ads for Financial Services

1. Certification: May need Google Financial Services certification
2. Prohibited: Guaranteeing approval, misleading terms
3. Required: Clear identification as funder or lead generator
4. Landing Page Must Include:
   • Company name and physical address
   • Clear funding terms (or link to them)
   • Privacy policy
   • State licensing information

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MCA Ad Strategy

What Works for MCA Consolidation Ads

1. Cash flow relief — "Stop the daily drain," before/after payment comparisons
2. Escape the stack — "Stop stacking. Start restructuring."
3. Business survival — "Your business isn't failing — your funding structure is."
4. Qualification self-selection — "If your business does $15K+/month and you're paying back more than one advance..."
5. Data-driven trust — "We analyze your bank statements to find the safest path to capital"
6. Multi-phase roadmap — Show the path from overleveraged to Line of Credit

What Works for Growth Capital Ads

1. Speed — "Funded in 24-48 hours"
2. No equity — "Scale without giving up ownership"
3. Seasonal timing — "Season starting? Get inventory capital before your competitors"
4. Simplicity — "Just 4 months of bank statements"

What Doesn't Work

1. Guarantees of approval (also illegal)
2. "Too good to be true" messaging
3. Aggressive/pushy language
4. Stock photos of cash/money stacks (looks scammy)
5. Vague or misleading terms
6. 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

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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