To qualify for a Merchant Cash Advance (MCA), businesses generally need to demonstrate consistent revenue, have been in business for a certain period, and meet certain credit and financial requirements. Common requirements include a minimum annual revenue, a credit score above a certain threshold, and a history of bank statements and credit card processing statements.
Detailed Requirements:
- Minimum Annual Revenue: Most lenders require a minimum annual revenue, often around $50,000 to $100,000 or more.
- Time in Business: Businesses typically need to be in operation for at least 6 months, and some lenders may require 12 months or more.
- Credit Score: A credit score of 550 or higher is generally required, but some lenders may be more flexible.
- Bank and Merchant Account Statements: Lenders will require 3 to 6 months of bank statements and/or merchant account statements to assess revenue and cash flow.
- Consistent Revenue: Businesses need to demonstrate consistent monthly credit card sales, often a minimum of $7,500 or $10,000.
- Low Chargebacks: Lenders will want to see low chargeback rates on merchant statements.
- Few NSFs (Non-Sufficient Funds): A low number of NSF checks also indicates financial stability.
- U.S. Residency and Legal Entity: Many MCA providers require that the business be U.S.-based and legally registered.
- Valid Government-Issued ID: Most lenders require a valid government-issued ID for identity verification.
- Stated Business Use of Funds: Some lenders may ask for a valid business-related purpose for the funds.
- Other Factors: Some lenders may consider factors like ownership percentage (at least 50%), industry restrictions, and existing MCA or loan stacking.