How to Qualify for a Merchant Cash Advance
A merchant cash advance (MCA) is one of the most accessible forms of business funding, but it isn't automatic. Funding partners look at how your business earns and manages money. Here's what they typically review, what you'll need to apply, and how to put your best application forward.
What funding partners look for
Unlike a bank loan, a merchant cash advance focuses on your business's revenue rather than relying mainly on your credit score. Most funding partners review four things.
Monthly revenue. Consistent revenue is the most important factor, because repayment comes from future sales. Many funding partners look for at least $30,000 in monthly deposits.
Time in business. Most funding partners prefer businesses that have been operating for at least 1 year. A longer track record usually means more options.
Bank account activity. Funding partners review your most recent 4 months of business bank statements to understand your cash flow, average daily balance, and how often your account runs low or overdraws.
Credit. Your credit is still reviewed, but it carries less weight than it would for a bank loan. Many businesses with lower credit scores still qualify.
Documents to have ready
Having these ready can speed up the process considerably:
- A completed application
- Your most recent 4 months of business bank statements
- A government-issued photo ID for each owner
- A voided business check
- Basic business information, such as your EIN, business address, and ownership details
Depending on the funding amount, some funding partners may also ask for a business tax return or proof of ownership.
How to strengthen your application
Keep your business and personal finances separate. Running revenue through a dedicated business account makes your cash flow easy to verify.
Avoid overdrafts and negative balances where you can. Frequent overdrafts can signal cash flow strain and may limit your options.
Be upfront about existing advances. If you already have a merchant cash advance or other financing, share it. Funding partners will see it on your statements, and being transparent helps your advisor find realistic options.
Apply for what you need. Requesting an amount that matches your revenue and your actual need usually leads to better offers than asking for the maximum.
Understand the cost before you accept
A merchant cash advance usually costs more than a traditional bank loan. MCAs are priced with a factor rate, which sets your total repayment amount up front. Before you accept any offer, ask for the total repayment amount, how payments are collected, and the estimated time to repay. A good advisor will walk you through each of these.
What happens after you apply
- Apply online. The application is all that's needed to start the approval process, and you share your recent bank statements.
- A Fidelity Funding advisor reviews your information and presents the options available to your business.
- You review the offers, including the full cost, and choose the one that fits.
- After you sign, funds can arrive in as little as 24 hours.
Is an MCA the right fit?
A merchant cash advance can work well for businesses with steady revenue that need capital quickly or can't wait on a bank. If another type of funding would serve your business better, such as equipment financing or a line of credit, we'll tell you.
Fidelity Funding Group is a business funding broker and does not lend directly. Funding is provided by third-party funding partners and is subject to approval. Merchant cash advances are not loans.
