MCA ISO | MCA Glossary

Definition

An Independent Sales Organization that brokers merchant cash advances between businesses seeking funding and MCA funders, earning commissions on funded deals.

Explanation

An ISO (Independent Sales Organization) in the MCA industry is a broker or sales organization that markets MCA products to small businesses on behalf of one or more funders. ISOs do not fund advances themselves — they originate applications, collect documentation, and submit files to funders who underwrite and fund the deals. In exchange, ISOs earn a commission — typically 5% to 12% of the advance amount — paid by the funder from the factor rate spread. ISOs range from single-person brokers to large organizations with dozens of account managers. Some ISOs have exclusive relationships with one or two funders; others work with 10 to 30 funding partners and can submit deals to whichever funder offers the best terms for a given business profile. The ISO relationship matters to borrowers because it shapes what offers they see and how aggressively their deal is shopped. An ISO with broad funder relationships who actively shops deals provides more competitive outcomes than an ISO with exclusive funder arrangements who routes all deals to a single preferred partner regardless of pricing.

Example

A business owner applies for an MCA through an online ISO platform. The ISO submits the application to five funders simultaneously. Three funders respond with offers ranging from 1.28 to 1.42 factor rates. The ISO presents all three offers to the business owner and earns an 8% commission — $8,000 on a $100,000 advance — from the funder the business owner selects.

Why It Matters

Understanding the ISO model helps you ask the right questions when working with an MCA broker. Ask how many funders the ISO works with, how they are compensated, and whether they will show you all offers received. A transparent ISO who presents multiple competing offers is acting in your interest. An ISO who presents a single offer "exclusively available through us" may be routing your deal to a preferred funder regardless of pricing.

Frequently asked questions

Should I go directly to an MCA funder or use an ISO?

Using a multi-funder ISO typically produces more competitive offers than applying directly to a single funder, because the ISO creates competition among multiple funders for your business. Applying directly to one funder removes that competitive dynamic. The ISO's commission is paid by the funder — not directly by you — though it is factored into the factor rate spread. The net effect on your pricing depends on whether the ISO actively negotiates on your behalf.