Non-recourse cohort financing vs. debt vs. MCA

Founders evaluating growth capital often compare a term loan, a merchant cash advance, and non-recourse cohort financing as if they were three prices for the same thing. They aren't. The defining question is what happens when the customers you acquired don't perform as expected.

Debt: a fixed obligation

A term loan carries an interest rate, a maturity date, and a repayment schedule that does not care how your cohorts perform. If acquisition softens, you still owe the same payment. The cost is usually the lowest of the three — but so is the flexibility, and the risk sits entirely with you.

Merchant cash advances: the daily debit

An MCA advances cash against future receivables and collects via a fixed daily or weekly debit, often at a steep factor rate. The debit continues regardless of margin, which is precisely when it does the most damage: a slow month accelerates the drain on liquidity.

Non-recourse cohort financing: contingent by design

We purchase a capped share of a specific cohort's future gross profit. Collection is a share of what the cohort actually generates — never a fixed schedule. If the cohort underperforms, you owe nothing beyond what it produces; we absorb the shortfall. Total cost is bounded by a contractual return cap.