What Is A DACA Account?

A traditional DACA is essentially a safety net for lenders. It's a three-way agreement between a lender, a borrower, and a bank, granting the lender control over the borrower's bank account in case of default or breach of covenant.

There are two main types of DACAs:

• Springing DACA: This type of DACA is activated only when a borrower fails to meet the loan terms, allowing the lender to direct the bank to either freeze or transfer funds from the borrower's account.
• Blocked DACA (BACA): This is a more active agreement where the lender maintains ongoing control and approval over withdrawals from the borrower's account. BACAs are commonly used in warehouse financing situations where receivables are initially deposited into the blocked account and then transferred to the borrower's bank account, either directly by the lender or with the lender's approval.

DACA Acronym

In finance, DACA stands for Deposit Account Control Agreement