Merchant cash advance qualifications and guidelines

The amount of total monthly deposits is the #1 qualifying factor in being approved for an mca cash advance.     But there are several other important merchant cash advance qualifications and guidelines.

The biggest qualifying factors are total monthly deposits, time in business, credit, cash flow and many more profile characteristics.

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Total dollar amount of monthly deposits:

The total dollar amount of monthly deposits from business revenue

500 + bureau score.

Many programs have a minimum credit score requirement of 500. Some programs require a credit score of 525.  Other programs either do not have a credit bureau score requirement,  or have a 550 minimum.

51% + Ownership

Many MCA Merchant Cash Advance programs and lenders require at least 51% ownership to close cash advance funding or other loans.  Another requirement under some programs is to have any owner with 25% or more ownership listed on the application and also be a signer at closing.

Minority Ownership

Minority ownership means any owner with less than 50% ownership. This can also mean an owner that has between 1% and 49% ownership in a business or enterprise. Another option some lenders offer is to approve and close financing with owners who are less than 50% owners.  However, this is not the norm and also rare and hard to find.

6 months time in business

Many lenders and funders have a minimum time in business requirement of 6 months. Others lenders that have more than a 6 month requirement have a 12 month, or 1 year time in business requirement.

Less than 6 months time in business

Another main minimum requirement is 3 months time in business by some lenders.  Some lenders and mca merchant cash advance companies do not have a minimum time in business requirement but need at least 2 months proof of business income, or 2 months proof of revenue.    These are considered start up businesses.   Find more information on start up businesses here.

$10,000 or more per month in deposits

A high percentage of funders require the merchant to have a minimum of $10,000 or more per month in deposits.  Some merchant cash advance companies offer funding programs that require only $5,000 or $7,500 per month minimum deposits.  However it is harder to find mca merchant cash advance companies that offer funding with the business depositing less than $10,000 per month.   We can place your business in programs that only require $5,000 to $7,500 + per month in deposits.

5 Overdrafts or NSF’s or less per month

Another frequent requirement is for the business to have no more than 5 Overdraft or NSF occurrence items per month.  In 2017, some MCA Merchant cash advance companies began to offer programs with 7 or 8 Overdrafts or NSF occurrences per month allowed, but this is also not common.

Less than 5 Deposits per month

Most funders require 5 or more deposits per month. A few require less, such as 3 or 4, but the majority still require 5. Merchants call in and complain that they were denied for too few deposits even though they had 5 or more deposits per month. How can that happen? To find out the answer, we need to look at what lenders and mca merchant advance companies consider a “deposit”

What is the definition of deposits per month?

A source of a deposit is from revenue the business has generated from sales and true business operations. The following is a list of deposits that are not considered business deposits:
1) Small dollar amounts such as less than $100.   This dollar figure can be higher, even $200 or $300 and funders may not consider that deposit because the dollar amount is too low.
2) Transfers from savings accounts or other accounts are also not considered deposits.  The reason for this is that the funder does not know if the original source of those transfers are from real business revenue.
3) Credits, rebates and other non revenue deposits. Many times, businesses will receive small credits and rebates from other merchants that are not true revenue and are not considered such by lenders.

No restricted industries

Most mca merchant cash advance companies have industries that they will
not lend to and restrict funding to.    You can ask in advance if your industry is one of those types of businesses they will not fund.    For more information see a list of restricted industries here

Find out what the mca merchant cash advance qualifications and guidelines are.

FAQ Frequently asked questions on Merchant cash advance qualifications and guidelines

How can you qualify for an mca cash advance? What are the qualifications?
The biggest qualifier is the average of the last 3 months total deposits to your business checking account. The average daily balances along with time in business, type of business and number of nsfs or overdrafts is also important.
How important is credit to qualifying for a cash advance?
A better credit score helps your business get more money and longer terms. Bad credit
usually does not make a difference between approval and decline. A higher credit score will also give you a program with better overall terms and conditions.
What are the guidelines for time in business for a cash advance?
To qualify, the guidelines are at least 3 months time in business, also known as TIB. If your business has just under 3 months time in business you can send a month to date daily activity printout of the current month to request an offer.
What do the guidelines say for qualifying for a higher amount? What are the qualifications for more money?
To qualify for more money higher, higher deposit totals along with better credit and a longer time in business.  Having less existing debt when you apply is also important. If your disposable business income and cash flow are low when you apply then your business may not be able to handle a larger loan. If the cash flow is still strong then you may qualify for a higher amount.
Does taking a cash advance hurt credit?
Taking a cash advance does not hurt credit. It does not show up on your personal credit as an account, with exceptions. If the business goes past due or defaults, that may trigger a reporting of the mca cash advance account on your personal credit file.

In summary:
Many of the criteria listed above are minimum criteria.   Many lenders and merchant cash advance companies list a minimum criteria but may still decline the merchant even if the company applying meets that criteria.

In their analysis, if your company profile meets merchant cash advance qualifications and guidelines criteria, they will consider the request, but might still not approve it.Increase your chance of getting  business funding greatly by knowing ahead of time what merchant cash advance qualification and guidelines typically are.   We specialize in identifying which mca programs their business will qualify for.

Review tips on qualifying and lowest rates and terms on a 2nd position or 3rd position merchant cash advance.    Read the steps and tips further below to get approved with the best mca terms with the lowest rates.