How to Calculate What the Rollover Cost You
Double Dipping in MCA Renewals

The second advance arrived before the first one had finished being expensive.

A renewal offer can present a large gross figure beside a manageable payment while depositing far less than either number suggests, because the new funding first retires the old balance and absorbs fresh fees before any dollar reaches the operating account. The headline describes the transaction from the funder's ledger, while the deposit states a smaller and more honest figure.

After the deposit posts, the accounting begins, and the only calculation that matters separates what was received from what is now owed.

Separate the Three Amounts in the Offer

The gross advance, the old payoff, and the net cash belong in separate columns. An owner who compares only the first number with the last will misread the entire proposal, since the distance between them is where the cost of the rollover resides.

Start with the gross advance authorized under the proposed agreement. Subtract the amount directed to retire the existing obligation, then subtract any fees withheld from funding. The remainder is the net cash available to the business. Compare that result with the actual deposit before accepting the accounting as complete.

The new total payback is another figure entirely. It states the scheduled amount under the fresh arrangement, subject to its own terms, and it does not become the cost of borrowing simply because the deposit was smaller. That is where the comparison usually fails.

Keep both agreements with the full payment history. Without the earlier contract and the record of debits, the business cannot determine whether the amount carried into the renewal includes an unpaid charge, a reversed credit, or a disputed fee. In most of the files we have seen, though the count is informal, the withheld items exceed what the owner recalled authorizing.

The Price of the Net New Cash

Six months after the contract was signed, the renewal offer arrives with congratulations, and the congratulations deserve a colder reading than the numbers beneath them.

The verifiable core of the complaint called double dipping is straightforward: a renewal that pays off an old balance with new funding while charging a new factor on the gross new advance, rather than on the net new cash alone, raises the effective cost of the funds the business actually receives. The honest calculation takes the total payback on the renewal, subtracts the old balance payoff retained by the funder, and measures the resulting cost against the net cash deposited.

Consider a hypothetical renewal with a gross advance of $100,000, an old balance payoff of $60,000, and withheld fees of $5,000, leaving net cash of $35,000 against a new total payback of $130,000. The business receives $35,000 it can spend while obligating itself to $130,000 minus the retired balance in fresh commitment. The figures illustrate the method alone and describe no actual funder's offer.

The renewal was cheaper than default. It was also the most expensive money the business ever received.

Most renewal letters know exactly which number the owner will read first. They place it accordingly. The rollover works the way a library fine works when the librarian lends you the fine money at interest: the shelf stands empty while the ledger grows fat, and the borrower thanks the lender for the accommodation.

Whether the funder intended the renewal as relief or as retention is a question worth carrying into the meeting.

Renewal Terms Against Stacking Terms

A renewal replaces the old obligation through the same funder while stacking adds a new funder alongside the old one, and counsel should identify which arrangement the papers describe before advising on either, since there are defenses that apply to one structure, though in practice the distinction blurs the moment daily debits overlap.

But the deposit tells a smaller story than the approval letter. Credibly's published MCA guidance describes fixed daily or weekly debits set at approval with a defined procedure for requesting a reconciliation credit, a structure worth understanding because renewal accounting often turns on which debits were credited and which were carried forward into the new balance.

The owner signed the renewal. Nobody mentioned that refusal was available at the same desk.

That sentence sounds obvious in daylight, though midnight revises it, with payroll posting in the morning and the offer expiring by noon.

Broker Compensation and Withheld Fees

Ask for the settlement statement before the congratulations call ends.

Every deduction between the gross advance and the deposit should appear on paper with a name beside it. Origination charges, broker compensation, and processing withholdings each require their own line, and a lump deduction described only as fees answers nothing. I am less certain about broker compensation on renewals than this section might suggest, since the disclosure required depends on the transaction and the forum.

Rarely does an offer letter volunteer the full schedule of withholdings. Request it in writing.

Calculation Review With Delancey Street

Frankly, the funding breakdown deserves twice the time the offer letter gets. The largest figure sits where the eye lands first because the letter was composed in order to be accepted. Patience belongs to the breakdown.

I have watched owners sign these at midnight. I understand the hour.

Delancey Street offers a free confidential initial review of MCA renewal and settlement questions. It is a settlement company rather than a law firm, and legal matters are handled by independently licensed counsel, whether counsel the owner retains or counsel the company coordinates.

We review the original agreement, reconstruct the payoff accounting, and prepare a comparison that states what the renewal costs against the cash it delivers. Steps the owner takes, or does not take, in the days after the offer arrives will decide the posture of every later negotiation, so resist the urge to authorize the rollover during the first call, and allow no verbal assurance, even briefly given, to substitute for the written breakdown. Counsel should ensure the figures match the deposit before anyone signs, since a prior credit omitted from the carryforward quietly reprices the renewal.

Simply bring both agreements, the payment history, and the written offer to the first discussion. An extremely careful hour with those papers is worth more than an extremely fast signature, and the businesses that survive renewals are usually the ones that read the smallest numbers first.