How MCA Companies Evaluate Your Business: What Underwriters Look For
- Lisa Stanko - Mohen
- 6 days ago
- 3 min read
A Merchant Cash Advance (MCA) offers fast, flexible funding—often with fewer requirements than traditional loans. But even though MCAs are easier to qualify for, underwriters still perform a detailed review of your business to assess risk and determine your funding amount, factor rate, and repayment structure.
Understanding exactly what MCA companies look for can help you improve your approval odds, secure better terms, and get funded faster. Here's a clear breakdown of the underwriting process and the factors that matter most.
What MCA Underwriters Evaluate Before
Approval
1. Monthly Revenue and Cash Flow Stability
The single most important factor in MCA underwriting is consistent revenue.Underwriters examine:
Monthly gross revenue
Frequency of deposits
Average daily balance
Stability of sales over the last 3–6 months
A business with steady deposits and predictable cash flow will receive higher approval amounts and better factor rates.
2. Bank Statements and Account Health
MCA funders analyze 3–6 months of bank statements to understand how your business manages money.
They look closely for:
No daily negative balances
Limited NSFs or overdrafts
Healthy average balance
Responsible expense patterns
Red flags like multiple overdrafts or constant low balances signal financial stress—which may reduce your approval amount or raise your rate.
3. Credit Card Processing Volume (If Applicable)
If your business accepts card payments, underwriters review:
Daily batch deposits
Chargeback history
Seasonal patterns
Refund trends
This helps determine your holdback percentage, since repayment may be tied to credit card sales.
Business Profile Factors Underwriters Consider
4. Time in Business
Most MCA companies require a minimum of 6 months in business, but 12+ months is preferred.
The longer you’ve been operating, the more confident underwriters feel about your ability to repay.
5. Industry Type (Risk Category)
Some industries naturally carry higher risk due to:
Seasonality
High overhead
Frequent chargebacks
Industry volatility
Examples of higher-risk categories include restaurants, retail, and transportation.High-risk industries may still be approved—but often with shorter terms or slightly higher rates.
6. Existing Advances or Loans
Underwriters check whether you have:
Current MCA balances
Loan obligations
Stacked advances
High monthly debt payments
MCA stacking (taking multiple advances at once) is a major red flag and may lead to denial or reduced funding.
7. Credit Score (But Only Lightly)
Unlike banks, MCA companies do not depend heavily on personal credit.
A soft pull may be used to review:
Open delinquencies
Large outstanding debts
Bankruptcies
Low credit is rarely a deal-breaker—but major unresolved issues can affect rates and terms.
What Underwriters Evaluate After Approval
8. Verification Calls
Some providers confirm:
Business ownership
Contact information
Landlord verification (for brick-and-mortar businesses)
These checks help prevent fraud.
9. Final Contract Review
Before funding, underwriters:
Verify business bank details
Confirm payment structure
Ensure accuracy of submitted documents
Once everything matches, funding is typically released within 24 hours.
How to Improve Your MCA Approval Odds
Keep bank statements clean
Avoid overdrafts and maintain a solid average balance.
Reduce unnecessary expenses
This shows healthier cash flow.
Pay down or pay off existing advances
Lower debt improves offers dramatically.
Maintain consistent revenue
Even small swings in sales can influence approval amounts.
Conclusion
MCA underwriting may be more flexible than traditional lending, but it still relies heavily on your cash flow, bank activity, and financial habits. Understanding what underwriters look for gives you the power to prepare, improve your profile, and secure the best possible terms.
Want the Best MCA Approval and Rates?
If you want to maximize your approval amount and secure the lowest factor rate possible, I can help you:
Review your bank statements
Strengthen your underwriting profile
Compare offers from multiple funders
Avoid predatory terms
Get funded in as little as 24 hours
Tell me your business type, revenue, and funding amount—and I’ll guide you step-by-step through the process.
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