How much do MCA companies settle for? Some MCA settlement companies advertise that they can settle MCA debt for, on average, between 30% to 60% of the claimed balance. There is no public data suggesting an average settlement amount. The MCA funding company will settle at an amount that it decides is preferable when compared to the other two options it has:
- the cash at risk if the borrower pays nothing, and
- what the funder is likely to recover by suing, under its collection policy.
The problem is that nobody defines what the percentage is of. Credible Law advertises 30% to 70% without saying whether that's of the payback amount or the remaining balance. Clarify Capital advertises a 30% to 60% settlement of "your balance." Coastal Debt Resolve advertises a 57% savings, but a disclaimer below the headline puts the savings at 27% once their program fees are paid. Typical MCA settlement amounts at each collection stage are covered separately. This page looks at settlements from the funder's perspective.
What number is the funder actually trying to protect?
The MCA company is only concerned about the cash it put at risk less the cash it has collected. That can be far less than the balance on the funder's statement. David Roitblat of deBanked gave an example: an advance of $100,000 and a payback amount of $150,000. Even though this MCA would be considered in default once $135,000 was paid, the MCA company hasn't lost any cash, because the $100,000 advance has already been paid back.
Using the 2023 Cedar Advance agreement with INVO, filed with the SEC, as an example, assume Cedar purchases $746,750 in receivables, the purchase price is $515,000, and the underwriting fee is $10,000. Cedar has put approximately $505,000 at risk. Ignoring the broker's commission and cost of money, here is Cedar's risk by amount paid:
| Already paid in | Remaining balance | Funder cash still at risk | Break-even as share of remaining balance |
|---|
| $100,000 | $646,750 | about $405,000 | about 63% |
| $300,000 | $446,750 | about $205,000 | about 46% |
| $500,000 | $246,750 | about $5,000 | about 2% |
With $300,000 paid in, a settlement at 40% of the remaining balance would lose Cedar approximately $26,000, but at 50% Cedar would receive slightly more than it put at risk ($223,375 vs. approximately $205,000). If Cedar paid the broker 10% of the advance (see Roitblat's pricing examples, which use 10% and 14%), it would need to settle for approximately 57% of the remaining balance to break even on cash, and at 14%, approximately 62%. If the borrower has paid in heavily, though, the funder may feel less urgency to settle.
How does the MCA company weigh the settlement amount?
The funder will weigh the proposed settlement amount against its other options. Funders expect some deals to default. As Roitblat has discussed, a deal with an 18% default rate that recycles in three months can be more profitable per month than a deal with a 6% default rate that recycles in seven months. Triton Recovery Group's chief legal officer said collections aim to let the client "redeploy those funds." Roitblat has also said that less than a 25% recovery rate may indicate an issue with the MCA contracts, the merchants, or the collection agency.
Funders may have fewer options for a lawsuit. In New York, a confession of judgment may only be filed against a business with a place of business in New York (CPLR 3218(b)). In Texas, as of September 1, 2025, confessions of judgment in sales-based financing transactions are void (Texas House Bill 700). In Pennsylvania, the merchant can file a petition to open the confession of judgment within 30 days (Pa. Rule 2959). Finally, aggressive collection may lead the borrower to challenge the MCA as a loan. In February 2026, the First Department held in People v Richmond Capital that over 3,000 of its advances were loans. The remand, in part, asks what Richmond Capital paid to settle merchants' claims.
It generally comes down to bankruptcy being the worst option for a funder. A funder's claim is secured only up to the value of its collateral (11 USC 506(a)). Receivables earned after filing escape prior liens (11 USC 552(a)). And under Subchapter V, a business can confirm a plan by paying its projected disposable income over three to five years (11 USC 1191(c)(2)).
Why do different funders have different policies?
Every funder has its own policy on collecting a defaulted debt, and they don't publicize it. Some hand files to collectors instructed to secure a signed stip. It's not unusual for "soft" collection companies to restructure payments before discussing a discount. Other funders, like Fundfi, have sent cease and desist letters to debt settlement companies, and two funders have filed lawsuits against MCA Resolve in New York Supreme Court. Your own answer also depends on how much you owe, any guarantee, and whether you've defaulted; see How Much Can I Settle My MCA Debt For?
How come some MCA companies will settle for less?
They settle for less because their first number is usually way too high. It's based on the full balance. On a Cedar default, Cedar adds 25% liquidated damages to the unpaid balance, a $2,500 default fee, attorney's fees of up to 40% of the amount claimed, and interest of 24% per year. So if the unpaid balance is $446,750, Cedar can claim $560,938 before attorney's fees and interest. A "40% settlement" of that is really about half the remaining balance. Generally, you'll get a bigger discount with a lump sum than with a payment plan.
Frequently Asked Questions
Does the funder really want the entire amount that they ask for when I default?
No. Their first number is usually based on the entire balance you owe, and in the case of companies like Cedar Advance, includes 25% liquidated damages, a default fee, and attorney's fees.
Will the funder settle with a debt settlement company?
Some will, but some don't. Some, like Fundfi, have sent cease and desist letters to debt settlement companies, and some have sued them.
Do the funders accept payment plans, or do they only accept lump sums?
They will do either. Collection companies often restructure first, lowering the daily debit, pausing debits, or switching from daily to weekly debits. You'll generally get a bigger discount by paying a lump sum, because the funder can redeploy that money.
What happens to the funder if I file for Subchapter V?
A lot of bad things. Their claim is secured only to the extent of the value of their collateral (11 USC 506(a)), and their lien doesn't reach receivables earned after filing (11 USC 552(a)). Moreover, you can confirm a plan paying your disposable income over three to five years.