# Business Funding Glossary | Rising Future Consultants
> Plain-language definitions of 32 business funding terms - factor rates, MCA, UCC filings, and more.
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# Business Funding Glossary

Clear, plain-language definitions of the terms lenders, brokers, and business owners use every day. Bookmark it, share it with your accountant, and use it to ask better questions when you're shopping for capital.

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## Frequently asked about funding terminology

#### What is the difference between a factor rate and an APR?

A factor rate is a simple multiplier that determines your total repayment - multiply your advance amount by the factor rate to know exactly what you'll repay. APR converts that cost into an annualized percentage, which makes comparing loans of different lengths easier. For short-term products like MCAs, the APR can look high because the total cost is paid back quickly. Always ask for both numbers when comparing offers.

#### Do I need good credit to qualify for business funding?

Not necessarily. Many alternative lenders focus on your business's revenue and cash flow rather than your personal credit score. A soft pull is used to pre-qualify you without any impact to your score. Businesses with as few as 6 months of operating history and consistent deposits often qualify.

#### What is a UCC filing and should I be worried about one?

A UCC-1 filing is a public record that a lender has a claim on certain business assets - it's standard practice in commercial lending. Having a UCC on file doesn't mean you're in trouble; it simply means a lender has a security interest. When you repay your loan or advance, the funder is required to file a UCC-3 termination to release that lien.

#### What does "holdback" mean in a merchant cash advance?

The holdback is the fixed percentage of your daily or weekly card sales that the funder automatically collects until the advance is repaid. If your holdback is 12% and you process $10,000 in card sales today, $1,200 goes toward repayment. Slower days mean smaller payments; busier days mean faster payoff - the remittance flexes with your sales.

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