What MCA underwriting is
A merchant cash advance isn’t a loan — it’s the purchase of a slice of a business’s future receivables at a discount. So underwriting an MCA isn’t about collateral or a credit score in isolation; it’s about cash flow. The underwriter’s job is to confirm the business generates enough steady revenue to fund the advance and still survive a fixed daily or weekly remittance on top of everything else it already owes.
Because the repayment comes straight out of daily deposits, the bank statement is the underwrite. Everything else — the application, the credit pull, the merchant’s story — gets checked against what the statements actually show.
The documents
- 3–6 months of business bank statements — the core of the file.
- A funding application — business details, ownership, requested amount.
- A credit pull — often soft first, informing paper grade and pricing.
- Sometimes merchant processing statements for card-split advances.
The metrics that decide it
Every funder has its own buy box, but the read comes down to the same handful of bank-statement numbers:
- True revenue — gross deposits minus transfers, self-funding, reversals and prior advances. This is what the advance is sized against. Sizing on inflated gross deposits is the fastest way to over-fund a deal.
- Average daily balance — how much cash the business actually holds on a normal day. It shows whether there’s a cushion to absorb the remittance between deposits.
- NSFs and negative days — how often the business runs out of money. These are the clearest stability signals on the statement.
- Existing positions — advances already being repaid, visible as recurring daily debits. They tell you how much of the merchant’s daily cash is already committed.
- Deposit count and consistency — a steady stream of many deposits reads far safer than a few lumpy ones.
Red flags
Certain patterns move a file toward decline no matter how good the deposit total looks:
- Daily debits from existing advances that already rival daily deposits.
- A rising trend of NSFs or negative days across the months.
- Large, unexplained transfers that inflate deposits but aren’t sales.
- Deposits concentrated on a few days with the balance drained to near zero between them.
- Payroll delayed, split, or skipped — a sign of a business under cash strain.
Paper grade and pricing
The metrics roll up into a paper grade (roughly A to D) that summarizes risk. The grade drives the offer: a stronger file earns a lower factor rate, a longer term and a smaller holdback; a weaker file prices higher and shorter, or declines. A clean first-position file might price near a 1.22 factor with a ~9% holdback, while a distressed file with stacking and NSFs runs well above that — if it funds at all.
From metrics to a decision
The final step is matching the read to a buy box: minimum monthly true revenue, a floor on average daily balance, a ceiling on NSFs and negative days, and rules on how many existing positions are allowed. Get those inputs right and the qualify / decline / counter decision almost makes itself. Get the inputs wrong — count a transfer as revenue, miss a position — and the whole decision is built on sand.
Where software fits
Spreading statements by hand is slow and error-prone, especially across six months and multiple accounts. A bank-statement scanner does the transcription and arithmetic in seconds, but the value is only real if the numbers are trustworthy. mcaunderwriting.com reads the statement with a vision model, then has deterministic code compute and reconcile every figure against the bank’s printed balances — serving a high-confidence read when it ties out, and flagging one for review when it doesn’t. You still make the call; you just start from a clean read instead of a spreadsheet.
Next, walk through the statement itself in how to read a bank statement for MCA, or learn to spot advances already in place in how to detect MCA stacking.