Lightspeed Capital: ‘Our goal is shorter MCAs’
November 6, 2026“Today, our typical remittance period for a merchant cash advance is approximately seven months,” said Asha Bakshani, CFO of Lightspeed during the company’s Q3 earnings call. “Our goal is to target a shorter remittance time frame, and we are making great progress towards that end.”
That objective can be most likely attributed to the company’s desire to redeploy that capital as fast as possible since the company is always closely monitoring and managing its cash flow.
“Aside from potential buybacks, our largest use of cash will be growing our merchant cash advance business,” Bakshani added. “There are currently $106 million in merchant cash advances outstanding, and we intend to continue to grow this high-margin business over time.”
Like other e-commerce platforms that do the same (Shopify and Block), Lightspeed has continued to be impressed by the overall positive impact of providing working capital to its own client base. In their regular quarterly financial docs for example, they explain that the purpose of their MCAs are “to help [merchants] with overall business growth and cash management. Merchants are meant to use these cash advances to manage their cash flows, to buy inventory, and to invest in marketing, amongst other things.”
Shopify Capital Originates $1.5B in SMB Loans and MCAs in Q3, Shares Delinquency Data
November 3, 2026Shopify Capital originated $1.5 billion in small business loans and merchant cash advances in Q3, putting the company at $4.3B for the year so far and already ahead of 2025’s full-year total.
This data came from their quarterly report:
The following table presents the delinquency status of the gross amount of loans and merchant cash advances by year of origination. The delinquency status is determined based on the number of days past the contractual or expected repayment date for which the Company anticipates to receive the amounts outstanding. The “current” category represents balances that are anticipated to be repaid within 29 days of the contractual repayment dates, or are anticipated to be repaid within 29 days of the expected repayment date.
91.1% of their deals are current while 6% are more than 180 days delinquent.
PayPal: Business Loan & Working Capital Merchants Have Higher Retention Rate
October 27, 2026Businesses that use PayPal’s Working Capital or business loan products have a 15% higher retention rate with PayPal’s payment processing product than those that don’t. That’s according to a study they conducted on 2025 data that they revealed in their Q3 2026 earnings report. The company also shared that their merchant lending business is growing.
Stripe had previously made a bid to acquire PayPal this summer but a deal never happened. PayPal has been trying to turn its business around ever since it brought on a new CEO earlier this year. AI is part of that strategy.
“We have reduced headcount by more than 2,000 and removed three organizational layers across most areas of the company,” said Enrique Lores, the CEO of PayPal during the Q3 earnings call. “We are also using AI and automation to drive productivity. For example, our AI chat agents now support customer service across 190 countries and six languages and have resolved more than 24 million contacts year-to-date.”
CFPB Reaffirms Excluding Merchant Cash Advances From Section 1071
October 13, 2026The CFPB recently published its annual Fair Lending Report. Under the section about small businesses, it reaffirmed its decision to exclude MCAs from the Section 1071 rule.
On May 1, 2026, the CFPB issued the final rule. The rule reduces the scope of “covered credit transactions” by limiting the types of transactions subject to reporting in order to focus data collection efforts on core lending products—loans, lines of credit, and credit cards—that are most utilized by small businesses. Accordingly, the rule sets forth certain exclusions: merchant cash advances, agricultural lending, and small-dollar business credit.
It further reiterated its decision to make other modifications to Section 1071.
In addition, the rule revises the definition of “small business” by reducing the gross annual revenue threshold from $5 million to $1 million. This will allow the CFPB to focus on collecting data related to micro and small enterprises, which are most relevant to section 1071’s goals. The rule also reduces the number of collected data points, extends and adopts a uniform compliance date of January 1, 2028, and simplifies the time and manner of data collection in order to allowinstitutions flexibility in how they comply with statutory requirements.
The rule updates are necessary to ensure reasonable implementation that does not restrict credit availability for America’s small businesses. The 2023 rule imposed a significant number of requirements that were not needed to advance the purposes of section 1071 of the Dodd-FrankAct. This rule recognizes those concerns and takes a more reflective approach, including just what the statute requires. The updates will result in cost savings for institutions and reduce the burden of data collection without sacrificing data availability.
Wells Fargo-supported Fund Aims to Refinance MCAs
October 8, 2026Sixty-one percent of all deals funded by Founders First Capital Partners went toward refinancing merchant cash advances. That’s intentional, according to the company, which just announced a capital raise of $19 million for one of its small business financing funds. Investors in the fund include Wells Fargo Foundation, Deutsche Bank Americas Foundation, Sunrise Banks, Community Reinvestment Fund USA, and others.
Founders First offers revenue-based financing, term loans, and hybrid loans that combine both. The company says borrowers that refinance their MCAs with Founders First experience an average effective APR decrease of 15 percentage points.
“To help meet that demand [of refinancing MCAs], Wells Fargo contributed $500,000 to Founders First, fiscally sponsored by Realize Impact,” a press release said.
Founders First does not advertise its own APRs, but according to a hybrid loan contract it originated in 2023 that deBanked obtained, it said that amounts collected from the revenue-based financing component of the loan should be excluded from interest and interest rate calculations and should not be considered when determining whether the loan exceeds a state’s maximum allowable interest rate.
Many of the company’s case studies tout the benefits of revenue-based financing. In one case, a borrower received $500,000 and grew revenue by 90% over 12 months. Founders First said that “revenue-based financing was ideal as the payments were increased during stronger revenue months.”
The company has deployed more than $20 million in capital, and 70% of its customers have increased their revenue. Its financing has also contributed to the hiring of more than 2,700 new full-time employees. Businesses can obtain funding of up to $2 million. In Founders First’s 2025 Impact Report, the company says its financing is better than SBA loans because borrowers do not need strong credit or assets. It also touts how more than half of its portfolio consists of refinanced MCAs.
True Food Kitchen Had $2.2M MCA Balance With Parafin Before Bankruptcy
October 7, 2026FRC Balance, LLC, which owns the True Food Kitchen restaurant chain, filed for bankruptcy this week. According to the company, True Food Kitchen has closed 12 restaurants, whose final day of service was Sunday, October 4. The company’s remaining 34 restaurants across 14 states are open and serving guests as usual.
Among the company’s listed creditors is Parafin, with an outstanding merchant cash advance balance of $2,206,502 reported in one of the bankruptcy filings. There is no indication that the MCA added to the company’s financial pressure (True Food Kitchen owes millions just to its food vendors alone, for example, and they cited organizational issues as the root cause). The balance is notable, however, for its size and for how the arrangement originated: through DoorDash Capital. deBanked was one of the first to discover DoorDash’s entry into MCAs in January 2022.
True Food Kitchen has been a poster child for DoorDash Capital since last year. In July 2025, DoorDash published a feature about the restaurant chain’s use of merchant cash advances. Titled How True Food Kitchen Used DoorDash Capital to Fuel Expansion, it opens by saying: “In September 2024, Peter Koumas, True Food Kitchen’s CFO, found DoorDash Capital while exploring the restaurant’s Merchant Portal, right as True Food Kitchen was in the middle of an exciting expansion phase, opening two new locations in Scottsdale, AZ, and Raleigh, NC.”
At the time, 10% of True Food Kitchen’s overall revenue came through DoorDash. The feature also noted that DoorDash Capital MCAs were provided by Parafin. In its bankruptcy filings, True Food Kitchen also listed a $1.8 million “MCA” balance with Rewards Network and a $7.1 million balance with InKind Credit, alongside debts to more traditional creditors.
Just a week ago, Parafin announced that it had been sold to Stripe for an undisclosed amount. It also revealed that it had originated $3 billion in funding since its inception in 2021. Until then, the scale of Parafin’s funding activity had been largely unknown. The True Food Kitchen bankruptcy now offers a glimpse of how large its exposure to a single client could be.
Counsel for the debtors said during a bankruptcy court hearing that they planned to reject Parafin’s contract and the payments towards it. True Food Kitchen blamed a combination of management turnover, changes in expansion strategy, failed investments, and product/branding issues as the reasons for its predicament.
Parafin Funded Over $3 Billion to Merchants in Five Years
October 1, 2026One of the key details revealed in the Stripe acquisition of Parafin is that Parafin originated $3 billion in funding since the company first started originating in 2021. Parafin supplied the financing infrastructure for platforms such as: DoorDash, Amazon, Gusto, SpotOn, Fullsteam, Jobber, and dozens more. Assuming the company experienced a normal growth curve, the company likely exceeded $1 billion in originations over the last 12 months, putting them roughly on pace with what Stripe’s own funding business was producing. deBanked previously estimated that Stripe Capital originated $1 billion in funding in 2025.
When the deal finally closes and Stripe Capital combines with Parafin, the resulting funding entity will rank among the largest online small business lenders in the country. Only Quickbooks Capital, Shopify Capital, OnDeck, and Square Loans will continue to be significantly larger, at least among the companies tracked by deBanked.
How to Pay Off an MCA With an SBA Under The New Rules Effective Oct 1
September 23, 2026The SBA has provided new guidance on its approach toward refinancing merchant cash advances: if you convert one to a term loan, you’ll have to wait a very long time to refinance it with an SBA.
According to the most recent Standard Operating Procedures that go into effect on October 1, “Sales-Based Repayment Agreements (e.g.; Merchant Cash Advances) are only eligible for refinancing if the original agreement has been converted to a term loan, has amortized for at least 24 months, and no additional Agreements have been implemented since the conversion of the prior agreement(s).” If there’s any uncertainty as to what that means, they go a step further and say “If the Sales-Based Repayment Agreement is still active, it is not eligible for refinancing.”
This is slightly different from last year’s SOP that said “merchant cash advances and factoring agreements are not eligible for refinancing.”
The new language was perhaps put in place to close a potential loophole where an MCA is converted to a term loan and then immediately refinanced by an SBA.
