Quick MCA Requirements for 600 Credit Score (One-Screen Summary)
Bank denial is common. Banks underwrite based on fixed-payment affordability and often require higher credit scores, collateral, and tax returns. MCAs are primarily revenue-based. If your credit score is around 600 and your deposits are steady, your bank statements—not your FICO—usually determine whether you’re approved for an MCA and what it costs.
A merchant cash advance is an advance of capital you repay from future revenue—often through daily or weekly remittances taken from your card sales or bank account. Repayment flexibility is the trade-off for a higher cost. According to Federal Reserve data, 37% of small employer firms applied for a loan, line of credit, or merchant cash advance in 2023, and online lenders approved 70% of applicants for at least some financing.
Here are typical baseline eligibility ranges (note: these vary by funder and are not guarantees):
| Requirement | Typical Minimum | What Can Trigger a Decline |
|---|---|---|
| Time in Business | 6+ months (12+ is stronger) | Less than 6 months of operating history |
| Monthly Deposits | $10,000–$20,000+ (often $15,000+) | Inconsistent revenue, high deposit volatility |
| Bank Statements | 3–6 months of business checking | Missing pages, excessive NSFs/overdrafts |
| Credit Score | Often 500–550+ (600 is usually workable) | Open bankruptcy, recent judgments |
| Cash Flow | Stable average daily balance, limited negative days | Frequent overdrafts, heavy existing ACH debits |
What matters most: deposit consistency, low NSF/overdraft activity, manageable existing debt or advances, and room in cash flow for daily or weekly remittances. Many MCAs can fund within 1–2 business days once the documents are verified, making them a fast business funding option when you need capital quickly.
Why You Got Declined by a Bank and Why MCA Underwriting Is Different
Banks underwrite fixed payments. MCAs underwrite your deposits and sales velocity. A bank decline usually reflects fixed-payment risk; an MCA approval usually reflects deposit consistency and whether your bank statements can support daily or weekly remittances.
Banks focus on higher credit thresholds (often 680+), collateral (real estate, equipment), tax returns showing profitability, debt service coverage ratios, and longer time in business (2+ years). They want proof you can afford a fixed monthly payment for 5–10 years. If your personal credit score is around 600, your debt-to-income ratio is elevated, or you lack strong collateral, traditional banks often decline your application.
MCA funders can still work with credit scores of ~600 because repayment is tied to revenue. You repay through daily or weekly remittances (a percentage of card sales or ACH withdrawals from your bank account), so the funder’s risk adjusts with your sales. Slow week? Your payment shrinks. Strong week? You repay faster. Traditional banks decline up to 80% of small business applications, which is why alternative business financing, such as MCAs, has grown in popularity.
The caution: MCAs can be expensive and must be compared carefully, not accepted impulsively. Factor rates, total payback, and payment frequency vary widely. You’ll see why pricing matters in the sections ahead.
| Bank Loan Underwriting | MCA Underwriting |
|---|---|
| Prioritizes credit score (often 680+) | Accepts lower credit (often 500+); focuses on revenue |
| Requires collateral, tax returns, and P&L | Requires bank statements, processing statements (if card-based) |
| Fixed monthly payment over 5–10 years | Daily or weekly payment tied to sales volume |
| Approval can take 2–8 weeks | Approval is often within 1–2 business days |
| Lower APR (6–12% typical) | Higher effective cost (estimated APR can be 80–200%+) |
Understanding the difference helps you set realistic expectations. If a bank declined you, an MCA may still approve you—but you need to know what underwriters check and how to compare offers safely. Learn more about alternative financing vs bank loans to see where MCAs fit in the funding landscape.
What Are Merchant Cash Advances? Simple, Accurate, and Contract-Aware
A merchant cash advance is an advance of capital you repay from future revenue—often through daily or weekly remittances taken from your card sales or bank account. It’s not a traditional loan. There’s no fixed monthly payment, no amortization schedule, and no interest rate in the traditional sense. You receive a lump sum today and repay a predetermined total amount over time.
How repayment works:
- Split funding from card sales: If you process credit cards, the funder may take a percentage of each batch settlement (for example, 10–20% of daily card sales) until the advance is repaid.
- ACH debits from your bank account: If you don’t process cards (or the funder prefers bank withdrawals), they deduct a fixed dollar amount or a percentage, either daily or weekly, via ACH.
- Holdback: The percentage of revenue collected each period (like 15% of daily sales) is called the holdback. A holdback is the percentage of your revenue the funder collects each remittance period to repay the MCA.
Core pricing terms you’ll encounter:
- Factor rate: A multiplier (like 1.20–1.50) used to calculate total payback. A factor rate is a multiplier (like 1.20–1.50) used to calculate total payback; it is not the same as an interest rate or APR. If you receive $50,000 at a 1.30 factor rate, you repay $65,000 total.
- Total payback: The exact dollar amount you owe (advance × factor rate). This is the number that matters most for comparing offers.
- Remittance frequency: Daily or weekly. Daily payments are more common and can strain cash flow if not sized correctly.
- Fees: Some funders charge origination, administration, or underwriting fees in addition to the factor rate. Always ask for total payback in writing.
Funding can be fast. Stripe notes that many MCAs fund within 1–2 business days after verification. Speed is a major reason businesses turn to MCAs when they need capital for inventory, a marketing push, or bridging a cash gap.
The two numbers that define an MCA’s cost are the factor rate and the total payback—because the factor rate tells you the multiplier, and the total payback tells you the exact dollars you owe. To understand the difference between cash advances vs loans, remember that MCAs are advances repaid from revenue, not loans with fixed interest and terms.
| Term | What It Means | Why It Matters | What to Request in Writing |
|---|---|---|---|
| Factor Rate | Multiplier to calculate total payback (e.g., 1.25) | Determines how much you repay for every dollar advanced | “What is the factor rate?” |
| Total Payback | Advance × factor rate (e.g., $50k × 1.25 = $62.5k) | The actual dollar amount you owe | “What is the total payback amount?” |
| Holdback | Percentage of revenue collected per period (e.g., 15%) | Affects daily/weekly cash flow | “What percentage of sales or daily ACH?” |
| Remittance Method | Daily card sales split or daily/weekly ACH debit | Determines payment predictability and cash flow impact | “How and when are payments collected?” |
| Term/Duration | Estimated time to repay (varies with sales volume) | Affects the estimated APR calculation | “What is the expected repayment term?” |
| Fees | Origination, admin, or underwriting fees | Can increase total cost beyond the stated factor rate | “Are there any fees on top of the total payback?” |
The MCA market was valued at $17.9 billion in 2023 and is projected to reach $32.7 billion by 2032. Growth has been driven by businesses seeking faster funding than banks offer and revenue-based repayment flexibility.
Typical Merchant Cash Advance Requirements When Your Credit Score Is Around 600
At 600 credit, you’re often in the ‘workable’ range—your bank statements decide the outcome. For a 600-credit-score MCA, the most common approval requirements are 3–6 months of bank statements, consistent customer deposits, and a sufficient cash cushion to cover daily or weekly remittances.
Credit score: Many providers accept scores in the 500s. Credibly’s published baseline includes a credit score of 500+, 6+ months in business, and $15,000+ in monthly revenue. A score around 600 typically improves approval odds and pricing versus lower scores, but cash flow still dominates the decision. Funders care more about whether your deposits can support another daily debit than whether your FICO is 580 or 620.
Time in business: Common minimum is 6+ months; 12+ months is stronger. Funders want to see a revenue track record. A brand-new business (under 6 months) may struggle to qualify unless revenue is exceptionally strong and consistent.
Revenue and deposits: Many funders want monthly deposits of $10,000–$20,000+. The $15,000+ monthly revenue benchmark cited by major providers is typical. True deposits are operating revenues from customers; underwriters typically exclude transfers between accounts and loan proceeds when calculating revenue. If your monthly deposits average $18,000, but $5,000 is owner transfers, underwriters see $13,000 in real revenue.
Bank statements: 3–6 months of business bank statements are common. Larger requests may require additional documentation, like tax returns or a profit-and-loss statement. Statements must be complete (no missing pages) and show the business name matching your application.
Industry risk: Regulated or volatile industries (such as cannabis, adult entertainment, or high-chargeback e-commerce) may face stricter criteria, higher factor rates, or require more documentation. Stable industries (retail, restaurants, professional services) often get better pricing.
| Requirement | Minimum | Strong | Notes / Why It Matters |
|---|---|---|---|
| Credit Score | 500–550+ | 600+ | 600+ often improves pricing; below 500 may auto-decline |
| Time in Business | 6+ months | 12+ months | A longer history shows stability and revenue consistency |
| Monthly Revenue | $10,000–$15,000+ | $25,000+ | Higher revenue supports larger advances and better pricing |
| Bank Statements | 3 months | 6 months | More months show patterns; 3 may suffice for smaller requests |
| Average Daily Balance | $2,000+ | $5,000+ | Cash cushion to absorb daily debits without overdrafts |
| NSFs/Overdrafts | Fewer than 5 in 3 months | Zero | Frequent NSFs signal you can’t support another payment |
| Existing Obligations | Limited ACH withdrawals | No other advances | Heavy stacking (multiple advances) compresses cash flow |
Understanding your business credit score can help you see where you stand, but remember that a personal credit score of 600 or higher and strong bank statements can still work. The risk tier funders assign you depends on levers that actually move approval and pricing: bank statement behavior, existing obligations, and statement cleanliness.
What MCA Lenders Check in Bank Statements: Underwriter Breakdown
Underwriters read patterns, not just totals. MCA underwriters don’t just total deposits—they separate true operating revenue from transfers, count negative-balance days, measure average daily balance, and look for existing ACH withdrawals (like other advances) that could squeeze cash flow.
The fastest way to get declined for an MCA—despite strong sales—is to show repeated NSFs/overdrafts or heavy existing ACH withdrawals that leave no room for another daily payment. Here’s what underwriters check line by line:
True Deposits vs Transfers
Underwriters scan for operating revenue (customer sales, card batches, invoices paid). They exclude transfers from savings, owner capital injections, and loan proceeds. If your statement shows $30,000 in monthly deposits but $10,000 is a transfer from your personal account, underwriters see $20,000 in revenue. Label your transfers clearly in your accounting so you can explain them if asked.
Deposit Frequency and Volatility
Daily or weekly consistency beats “one big deposit” months. If you show $5,000 deposited weekly for 12 weeks, that’s safer than $60,000 deposited in one lump sum. Stable patterns are easier to underwrite because the funder can predict your ability to support daily remittances. High volatility (one month $25,000, next month $8,000, next month $30,000) raises questions about sustainability.
Average Daily Balance and Ending Balance
A cash cushion matters. Underwriters calculate the average daily balance (sum of daily ending balances ÷ number of days) to see if you maintain enough cash to absorb a daily ACH debit without going negative. If your average daily balance is $3,000 and the MCA would pull $200/day, you have breathing room. If your average daily balance is $500, a $200/day debit risk can lead to overdrafts.
Benchmark guideline: aim for an average daily balance of at least 10–15x your expected daily payment. If the funder quotes a $300/day debit, try to show an average daily balance of at least $ 3,000. Ending balance (the balance on the last day of the month) is also checked. Consistently low ending balances (under $1,000) signal tight cash flow.
NSFs, Overdrafts, and Negative Days
NSFs (non-sufficient funds fees) and overdrafts signal liquidity stress. A negative day is a day when your account balance falls below $0; frequent negative days can signal that you can’t reliably support daily remittances. Underwriters consider NSF fees, returned ACH attempts, and the number of days your account carried a negative balance. More than 3–5 NSF incidents in 3 months often trigger a decline or require a larger cash reserve before approval.
Existing ACH Obligations and Stacking
Underwriters identify other loan or advance pulls. They look for recurring ACH debits labeled “merchant cash,” “capital advance,” or similar. MCA stacking is taking multiple cash advances at the same time; it can increase your combined daily payment burden and is a common reason for declines. If you already have $500/day going out to another funder, adding another $300/day may leave you with negative cash flow during slow weeks.
Funders also check for term loan payments, equipment lease payments, and business credit card auto-pays. The goal: can your deposits support existing obligations plus the new MCA?
Large Withdrawals or Irregular Spending
Frequent large cash withdrawals or irregular spending can raise questions. If you withdraw $8,000 in cash every week, underwriters may ask whether it’s part of normal business operations (such as paying vendors in cash) or personal use. Mixed personal/business transactions in a business account make it harder to verify the true operating cash flow.
| Statement Signal | Green Flag (Good) | Red Flag (Risky) | Why It Matters | How to Fix |
|---|---|---|---|---|
| Deposits | Daily/weekly operating revenue, consistent amounts | Mostly transfers, one-time lump sums, and high volatility | Shows sustainable revenue vs inflated deposits | Separate business and personal; document transfers |
| Average Daily Balance | $3,000+ (or 10–15x expected daily payment) | Under $1,000, frequent near-zero balances | Cushion to absorb payments without overdrafts | Build reserves; delay applying until balance improves |
| NSFs/Overdrafts | Zero or 1–2 in 6 months | 5+ in 3 months, recurring negative days | Signals’ inability to handle another fixed debit | Pay down debt, improve cash flow, and apply after a clean 2–3 months |
| Existing Advances | Zero or one manageable advance with low daily debit | Multiple daily ACH debits (stacking), high total pull | Leaves no room for new payment without a squeeze | Pay off or consolidate existing obligations before applying |
| Withdrawals | Predictable operating expenses (rent, payroll, vendors) | Frequent large cash withdrawals, irregular spending | Makes it hard to verify operating cash flow | Use checks/ACH for expenses; minimize cash use |
Stripe’s documentation confirms that MCA providers typically request 3–6 months of business bank statements and recent credit/debit card processing statements to assess repayment ability. Understanding cash flow financing principles helps you see why these statements matter so much to underwriters.
Self-Audit: Calculate Your MCA Payment Room in 10 Minutes
Before you apply, estimate how much of a daily or weekly payment your cash flow can handle. If adding a new daily payment would push you into overdrafts during a normal slow week, the advance amount is too high, or an MCA may be the wrong product.
Payment room is the portion of your normal cash flow that can be allocated to a new daily or weekly remittance without triggering overdrafts or missed expenses. Here’s a lightweight calculation framework:
Step 1: Identify True Monthly Deposits
Pull your last 3 months of bank statements. Add up customer deposits (card batches, invoice payments, and cash sales deposited). Exclude owner capital, transfers between accounts, and loan proceeds. Divide by 3 to get the average monthly true deposits. Example: Month 1 = $22,000, Month 2 = $19,000, Month 3 = $24,000. Average = $21,667/month.
Step 2: Estimate Average Daily Operating Cash Cushion
Calculate your average ending balance across the last 90 days or use a conservative estimate (like the lowest balance you’re comfortable maintaining). If your average ending balance is $4,500, that’s your cushion. Don’t use peak balances; use what you normally carry after paying bills.
Step 3: List Existing Fixed Obligations Pulled from the Account
Write down rent (if ACH), existing loan/advance payments, equipment leases, business credit card auto-pays, payroll (if ACH), and any other recurring debits. Add them up. Example: $800/month rent, $500/month existing advance, $300/month equipment lease = $1,600/month = ~$53/day in fixed obligations.
Step 4: Stress-Test with a 20% Revenue Drop
Imagine revenue drops 20% for two weeks. If your average monthly deposits are $21,667, a 20% drop is $4,333 per month, or $144 per day. Can you still cover existing obligations plus a new MCA payment if deposits fall by $144/day? If your current cushion is $4,500 and your existing obligations are $53/day, adding a $200/day MCA payment results in a $253/day outflow. At reduced revenue, that’s tight.
Outcome: Categorize Your Payment Room
Based on your numbers, categorize yourself:
- Comfortable: Average daily balance is 15x+ the proposed daily payment, and existing obligations are low. You have room for a new MCA without strain.
- Tight: The average daily balance is 8–12 times the proposed payment. You can handle it during normal weeks, but slow periods will squeeze you. Proceed with caution; negotiate lower daily debits or a shorter term.
- High risk: Average daily balance is under 5x the proposed payment, or existing obligations already consume most cash flow. Adding an MCA could trigger overdrafts. Consider alternatives such as a line of credit, invoice factoring, or delaying payments until cash flow improves.
| Worksheet Field | Your Number | Example |
|---|---|---|
| Average monthly true deposits (3-month avg) | $_______ | $21,667 |
| Average daily deposits (monthly ÷ 30) | $_______ | $722/day |
| Average daily balance (or conservative cushion) | $_______ | $4,500 |
| Existing fixed obligations per month | $_______ | $1,600 |
| Existing obligations per day (monthly ÷ 30) | $_______ | $53/day |
| Proposed MCA daily payment | $_______ | $200/day |
| Total daily outflow (existing + new MCA) | $_______ | $253/day |
| Cushion ratio (avg balance ÷ new payment) | _____x | 22.5x (comfortable) |
| Stress test: 20% revenue drop (daily deposits × 0.8) | $_______ | $578/day deposits |
| Can you cover the total outflow during stress? | Yes / No / Tight | Yes (tight but workable) |
Online lenders approved 70% of applicants for at least some financing in 2023, but approval doesn’t mean the terms are safe for your cash flow. This self-audit helps you decide if the offer fits. Explore alternative lending options if you discover that an MCA would strain your budget.
Common Reasons MCA Applications Get Delayed or Declined and How to Fix Them
Most MCA declines are preventable: clean, complete bank statements and manageable existing ACH withdrawals often matter more than a 600-level credit score. Here are the top 6 decline triggers and what to do about each:
Incomplete Statements, Mismatched Business Name, or Mixed Personal and Business Transactions
Why it matters: Missing pages make it impossible to verify deposits and calculate the average daily balance. If your legal business name doesn’t match the name on the bank account, underwriters can’t confirm it’s your business. Mixed personal/business transactions cloud the picture of operating cash flow.
What to do: Download the complete PDF statements (all pages, including any blank pages the bank includes). Verify your business name matches across the application, bank account, and EIN documentation. Open a separate business checking account if you’re currently using a personal account for business. Most fixes take 7–14 days (such as opening a new account or requesting corrected statements).
Excessive NSFs, Overdrafts, or Frequent Negative Days
Why it matters: Signals you can’t reliably support daily remittances. If you overdraft 6 times in 3 months, adding another $200/day debit will make it worse.
What to do: Pay down existing debts to reduce outflows. Negotiate payment plans with creditors. Build a cash reserve (aim for a minimum average daily balance of $3,000–$5,000). Wait 2–3 months of clean statements (zero NSFs) before reapplying. Some funders will approve if you can show improvement, so provide a brief explanation if recent overdrafts were one-time events (such as a delayed customer payment that has now been resolved).
High Existing Obligations: Multiple Advances or Stacking
Why it matters: MCA stacking is taking multiple cash advances at the same time; it can increase your combined daily payment burden and is a common reason for declines. If you already have $600/day going to two other funders, most new funders will pass because there’s no room.
What to do: Pay off or consolidate existing advances before applying for a new one. Some funders offer “buyout” or “refinance” MCAs where they pay off your existing advance and roll it into a new, single advance (often at a better rate). Ask about consolidation options. If you can’t consolidate, focus on paying down the smallest advance first to free up daily cash flow, then reapply. This is a 30–60 day fix.
Unverifiable Deposits: Too Many Transfers, Cash Deposits Without Support
Why it matters: Underwriters can’t confirm operating revenue when most deposits are labeled “transfer” or “mobile deposit” without supporting documentation. Large cash deposits (such as $10,000) raise questions unless you can document the source (e.g., cash sales receipts).
What to do: Keep cash sales receipts or daily sales logs. Deposit cash daily or weekly in predictable amounts (not one lump sum). Use your merchant processor for card sales so batches show as operating revenue. Label internal transfers clearly in your accounting. Provide a brief explanation letter if needed (“$5,000 transfer on 3/15 was owner capital injection, not operating revenue; here’s the matching withdrawal from my personal account”).
Operational Instability: Sharp Revenue Drop, Inconsistent Deposits
Why it matters: If month 1 shows $30,000 deposits, month 2 shows $12,000, and month 3 shows $8,000, underwriters see declining sales and worry you can’t sustain payments.
What to do: If the drop is seasonal (like a retail business in January after the holiday rush), explain the pattern and show prior-year statements proving it’s normal. If the drop is operational (e.g., due to a major client loss or temporary closure), stabilize revenue before applying. Wait until you have 2–3 months of recovered, consistent deposits. If revenue is truly declining, an MCA may be the wrong product; consider avoiding loan mistakes by exploring a line of credit or short-term working capital loan instead.
Credit or Legal Flags That Can Cause Auto-Decline
Why it matters: Open bankruptcy (Chapter 7, 11, or 13), active tax liens, recent judgments, or being on the MATCH list (a merchant account terminated for fraud/chargebacks) can trigger auto-declines even if cash flow is strong.
What to do: If you’re in active bankruptcy, you likely can’t get an MCA until it’s discharged. If you have a tax lien, some funders will work with you if you’re on a payment plan and current. Provide documentation (an IRS payment agreement and proof of current payments). If you’re on the MATCH list, you may need a high-risk merchant account and a specialized funder. Resolve legal issues first, then reapply. This is often a 60+ day fix (or longer for bankruptcy).
| Problem | Underwriter Concern | Fix |
|---|---|---|
| Missing statement pages | Can’t verify full deposit history or calculate average daily balance | Download complete PDFs; request from the bank if needed (7 days) |
| Mismatched business name | Can’t confirm the account belongs to the applicant’s business | Update bank account name or provide DBA documentation (14 days) |
| Frequent NSFs/overdrafts | You can’t support another daily payment | Build cash reserve, pay down debts, show 2–3 clean months (30–60 days) |
| Multiple existing advances | Stacking leaves no room for payment room | Consolidate or pay off one advance before applying (30–60 days) |
| Mostly transfer deposits | Can’t verify operating revenue | Separate accounts, document transfers, use merchant processor (14 days) |
| Declining revenue trend | Worried you can’t sustain payments | Stabilize sales, show 2–3 months of recovery (60+ days) |
| Open bankruptcy or lien | Legal restriction or creditworthiness risk | Resolve or document payment plan; may need specialized funder (60+ days) |
MCA Application Documents Checklist: What You’ll Need to Submit
Most MCA applications require 3–6 months of business bank statements and (if you take cards) recent processing statements, because underwriters use them to verify true deposits and repayment capacity. Here’s the definitive checklist:
Documents typically required:
- 3–6 months of business bank statements: Complete PDFs showing all pages, transactions, and beginning/ending balances. Stripe confirms this is standard. Larger requests may require 6 months; smaller requests may require 3 months.
- Merchant processing statements (if card-based): If you process credit/debit cards, funders want 3–6 months of processing statements showing sales volume, chargebacks, and refunds. A merchant processing statement shows your card sales volume, refunds/chargebacks, and transaction activity used to size an MCA. Provide statements from your processor (Square, Stripe, Clover, etc.). If you don’t take cards, skip this.
- Government-issued ID: Driver’s license or passport for identity verification. Must match the name on the application.
- Voided check or bank letter: Confirms account ownership and routing/account numbers for ACH setup.
- Basic business information: Legal business name, DBA (if applicable), EIN (Employer Identification Number), business address, and entity documents (articles of incorporation, operating agreement) if you’re an LLC or corporation. Sole proprietors may not need entity docs, but will need to confirm their personal SSN for a credit check.
- Sometimes: recent tax returns or profit-and-loss statement: For larger requests (above $100,000) or if revenue is inconsistent, funders may ask for the most recent business tax return (Form 1120, 1065, or Schedule C) or a recent P&L. Not always required for smaller advances.
| Document | What It Proves | Common Issues |
|---|---|---|
| Business bank statements (3–6 months) | Revenue, deposits, cash flow, and existing obligations | Missing pages, wrong account, personal account used |
| Merchant processing statements (3–6 months) | Card sales volume, chargeback rates, and refund activity | Statements not provided, high chargeback ratio |
| Government-issued ID | Identity verification, match to the application | Expired ID, name mismatch, poor photo quality |
| Voided check or bank letter | Account ownership, routing/account numbers | Check doesn’t match statements, account closed |
| EIN documentation | Business is registered, tax ID confirmed | Sole proprietor using SSN (acceptable, but explain) |
| Entity documents (LLC/Corp) | Legal structure, ownership, authorized signers | Expired or not filed in the state of operation |
| Tax returns or P&L (sometimes) | Profitability, revenue verification for large requests | Returns not filed, losses shown (may not disqualify) |
Tip: gather these documents before you apply so you can respond to requests within hours, not days. Faster verification means faster funding. For more guidance on the application process, see the funding FAQs.
How to Compare Merchant Cash Advance Offers Safely with an Offer Scorecard
Never compare MCAs by factor rate alone—compare total payback and payment method. To compare MCA offers safely, ask for four numbers in writing: the advance amount, the factor rate, the total payback, and the expected daily/weekly payment method—then calculate an estimated APR range so you can compare it with other financing options.
A safe MCA comparison uses total payback and expected payment frequency, then converts the offer into an estimated APR range so you can compare it to a line of credit or a term loan. Here’s how:
Ask for These in Writing
- Advance amount: How much cash you receive upfront (for example, $50,000).
- Factor rate: The multiplier (for example, 1.25).
- Total payback: Advance × factor rate (for example, $50,000 × 1.25 = $62,500). Total payback is the exact dollar amount you must repay (advance × factor rate, plus any fees).
- Remittance method: Daily ACH, weekly ACH, or percentage of daily card sales (split funding). Ask: “What percentage of sales or daily ACH amount?”
- Expected term: How many weeks or months until you’re repaid (this varies with sales volume, but ask for the funder’s estimate based on your revenue).
- Origination or administration fees: Any fees on top of the total payback. If a funder charges a $1,000 origination fee, your real total payback is $63,500, not $62,500.
- Prepayment policy: Can you repay early? Is there a discount or penalty? Some MCAs offer a small discount (like 2–5%) if you repay within 90 days; others have no prepayment benefit.
Calculate an Estimated APR Range
Because payments are frequent and terms vary, you may need an estimated APR range to compare to other products. MCAs don’t have a traditional APR (they’re not loans with interest), but you can estimate an annualized cost. Use this simplified formula:
Cost of capital = Total payback − Advance
Estimated APR = (Cost of capital ÷ Advance) ÷ (Term in months ÷ 12) × 100
Example: $50,000 advance, $62,500 total payback, 9-month expected term.
Cost of capital = $62,500 − $50,000 = $12,500
Estimated APR = ($12,500 ÷ $50,000) ÷ (9 ÷ 12) × 100 = 25% ÷ 0.75 × 100 = 33.3% APR
That’s higher than a bank loan (6–12%), but if you repay faster (say, in 6 months), the APR rises. If the term is 6 months:
Estimated APR = ($12,500 ÷ $50,000) ÷ (6 ÷ 12) × 100 = 25% ÷ 0.5 × 100 = 50% APR
Industry estimates show MCAs can have very high effective APRs, with some estimates ranging from 80% to 200%+, depending on structure. Understanding this helps you compare to a line of credit (often 12–30% APR) or a term loan (8–20% APR).
Safety Warning: Red Flags in MCA Offers
If a lender won’t clearly state the total payback or the payment schedule assumptions, treat it as a red flag. Other warnings:
- Pressure to sign immediately without time to review.
- Vague language like “we’ll collect a percentage” without stating the exact percentage or dollar amount.
- Hidden fees (setup fees, monthly maintenance fees, early termination fees not disclosed upfront).
- UCC blanket liens that could interfere with future financing.
- Confessions of judgment (COJ) clauses that allow the funder to seize assets without court process (illegal in some states; avoid if possible).
- Stacking restrictions that prohibit you from taking another advance for 12+ months (locks you into one funder).
| Scorecard Field | Offer A | Offer B | Offer C |
|---|---|---|---|
| Advance Amount | $50,000 | $50,000 | $50,000 |
| Factor Rate | 1.25 | 1.35 | 1.20 |
| Total Payback | $62,500 | $67,500 | $60,000 |
| Origination/Admin Fees | $0 | $1,000 | $0 |
| True Total Payback | $62,500 | $68,500 | $60,000 |
| Daily or Weekly Payment | Daily ACH: $300/day | Weekly ACH: $1,500/week | Daily split: 15% of card sales |
| Expected Term | 9 months | 10 months | 8 months |
| Estimated APR | ~33% | ~41% | ~30% |
| Prepayment Policy | No discount | 5% discount if repaid in 90 days | No discount |
| UCC Filing | Yes (blanket lien) | Yes (specific to receivables) | No UCC |
| Personal Guarantee | Yes | Yes | Yes |
| Stacking Restrictions | No new advances for 6 months | No restriction | No new advances until 50% repaid |
| Verdict | Middle cost, tight restriction | Highest cost (fees), better prepay option | Lowest cost, flexible, cleanest terms |
In this example, Offer C has the lowest total cost, no fees, and the fewest restrictions—making it the safest choice. Offer B has the highest cost due to fees, but the 5% prepayment discount could help if you repay fast. Offer A is middle-of-the-road but has a 6-month stacking restriction, which could be a problem if you need more capital later.
For more help choosing a provider, review the best MCA companies and their typical terms.
Alternatives to an MCA When an MCA Isn’t the Safest Fit
If you can qualify for a lower-cost product, it’s usually worth comparing. If daily payments would strain your cash flow, a line of credit or invoice factoring may be safer than an MCA—even if approval takes a bit longer.
MCAs are among the financing options business owners pursue. Federal Reserve data show that 37% of small employer firms applied for loans, lines of credit, or merchant cash advances in 2023, indicating that many businesses explore multiple options before choosing one.
Consider these alternatives:
Business Line of Credit
A business line of credit is good for ongoing working capital. You draw funds as needed, repay, and draw again (revolving credit). Payments are often monthly, not daily. APRs range from 12–30% for online lenders and are lower for banks. Approval may take 3–7 days. If your credit score is around 600 and you have strong revenue, you may qualify for a $25,000–$100,000 line of credit.
Term Loans
Business term loans provide fixed monthly payments over 1–5 years. Interest rates are typically 8–20% APR for online lenders, lower for banks or SBA loans. Good if you need a lump sum for equipment, expansion, or acquisition, and can afford a fixed payment. Term loans usually require better credit (650+) and more documentation than MCAs.
Invoice Factoring
If you’re a B2B business with outstanding invoices, you can sell those invoices for immediate cash. Invoice factoring is when you sell outstanding invoices for immediate cash, so repayment depends on your customers paying invoices—not your daily card sales. Factoring rates are typically 1–5% of invoice value, plus a weekly fee if customers pay slowly. Good if your cash flow problem is customer payment delays. Learn more about what is factoring.
Equipment Financing
If you need to buy equipment (trucks, machinery, computers), asset-backed equipment financing is often easier to qualify for than unsecured loans. Payments are monthly, and the equipment serves as collateral. Rates range from 6–20% depending on credit and equipment type.
When to Choose an MCA vs Alternatives
MCAs are best for short-term, high-ROI uses (such as buying inventory for a proven sales season, funding a marketing campaign with measurable returns, or bridging a cash gap until a large customer payment arrives). MCAs are typically not a good fit for chronic cash flow issues, covering payroll for months, or paying off other debt (unless it’s a consolidation/refinance MCA).
| Product | Speed | Typical Credit Sensitivity | Payment Frequency | Best Use Case |
|---|---|---|---|---|
| MCA | 1–2 days | Low (500+ often OK) | Daily or weekly | Short-term, high-ROI needs; fast funding |
| Line of Credit | 3–7 days | Medium (600+ preferred) | Monthly minimum payment | Ongoing working capital, flexible draw/repay |
| Term Loan | 5–14 days | Medium-High (650+ preferred) | Monthly fixed payment | Equipment, expansion, acquisition, predictable use |
| Invoice Factoring | 1–3 days | Low (depends on customer credit, not yours) | No payment (you sell invoices) | B2B with slow-paying customers, improve cash cycle |
| Equipment Financing | 3–10 days | Medium (600+ workable) | Monthly fixed payment | Buying machinery, vehicles, tech, and equipment is collateral |
Mini Case Study: What Approval-Ready Bank Statements Look Like
Here’s a realistic approval scenario for a 600-credit owner with steady sales. In most 600-credit MCA approvals, pricing improves when statements show stable deposits and minimal overdrafts—because underwriters see less risk of interrupted daily payments.
Business profile: Retail clothing store, 18 months in business, credit score 605, monthly revenue $28,000–$32,000 (average $30,000/month). The owner was declined by two banks (citing a low credit score and a lack of collateral) and applied for a $40,000 MCA to buy seasonal inventory.
Statement highlights (last 6 months):
- Deposits: Daily card batches and occasional cash deposits totaling $28,000–$32,000/month. No large transfers or owner injections. Revenue is 100% operating.
- Deposit consistency: Daily batches range from $800 to $1,200, with a consistent pattern; no months below $28,000.
- Average daily balance: $6,200 (calculated across 180 days). Ending balances ranged from $4,500–$8,000.
- NSFs/overdrafts: Zero NSFs, one overdraft (corrected same day) in month 3. Clean otherwise.
- Existing obligations: Rent ($1,800/month via check, not ACH), no existing advances, business credit card auto-pay ($400/month).
Offer comparison (anonymized, no lender names):
| Scorecard Field | Offer A | Offer B |
|---|---|---|
| Advance Amount | $40,000 | $40,000 |
| Factor Rate | 1.28 | 1.35 |
| Total Payback | $51,200 | $54,000 |
| Fees | $0 | $800 origination |
| True Total Payback | $51,200 | $54,800 |
| Payment Method | Daily split: 12% of card sales | Daily ACH: $350/day |
| Expected Term | 8 months (varies with sales) | 7 months (fixed daily debit) |
| Estimated APR | ~42% | ~63% |
| Prepayment | No discount | 3% discount if repaid in 90 days |
| Restrictions | No new advance until 50% repaid | No new advances for 6 months |
Why Offer A is safer: Lower total cost ($51,200 vs $54,800), no fees, and the payment method (12% of card sales) is flexible. If sales dip one week, the payment shrinks automatically. Offer B has a fixed $350/day ACH, which is riskier if sales slow. The 3% prepayment discount in Offer B is nice, but the higher base cost and fixed daily debit make it less safe.
Outcome: Owner chose Offer A, received $40,000 in 2 business days, bought inventory for the back-to-school season, and repaid the advance in 7 months (one month faster than expected because sales were strong). The total cost was $51,200, and the owner avoided overdrafts because the 12% holdback was adjusted based on sales.
What made this approval-ready:
- Clean statements (complete, no missing pages, business name matched).
- Consistent deposits with minimal volatility.
- Strong average daily balance ($6,200) relative to the expected payment (~$300–$400/day).
- Zero NSFs in the review period (one overdraft was explained and corrected).
- No existing advances to compete for cash flow.
This example shows that a 600 credit score doesn’t prevent approval. The bank statements told the story. For more real-world examples, see customer reviews of businesses funded through similar situations.
Frequently Asked Questions
Can I get a merchant cash advance with a credit score of around 600?
Yes, many MCA providers can approve a 600 credit score because they primarily underwrite your bank deposits and cash flow, not just your FICO. A score around 600 typically improves your chances of getting approved and getting a better rate than scores below 550, but the deciding factor is your bank statements. Credibly’s baseline requirements include a 500+ credit score, 6+ months in business, and $15,000+ in monthly revenue, showing that 600 is workable. Your statement history (consistent deposits, stable balances, and limited NSF activity) typically determines approval and the factor rate you’re offered.
How many months of bank statements do MCA lenders require?
Most MCA funders typically request 3–6 months of business bank statements to verify deposits, balances, and existing payment obligations. Stripe confirms this is standard documentation. Smaller advance requests (under $25,000) may accept 3 months of statements, while larger requests (above $50,000) often require 6 months or more. Some funders may also request recent tax returns or a profit-and-loss statement if revenue is inconsistent or the request is above $100,000.
What’s the difference between a factor rate and an APR?
A factor rate is a multiplier that sets your total payback, while APR estimates the annualized cost—so APR is better for comparing an MCA to other financing. For example, a factor rate of 1.30 on a $50,000 advance means you repay $65,000 total. That’s $15,000 in cost. To estimate APR, divide the cost by the advance amount, then annualize it over the term. If you repay over 9 months, the estimated APR is about 40%. If you repay over 6 months, it’s about 60%. MCAs can have very high effective APRs; some estimates range from 80% to 200%+, depending on structure and term. Factor rates are not interest rates, so they can’t be directly compared to loan APRs without doing the math.
What bank statement issues commonly cause an MCA decline?
Frequent NSFs/overdrafts, recurring negative-balance days, and heavy existing ACH withdrawals are among the most common bank-statement reasons for an MCA decline. If you show 5+ NSF fees in 3 months, underwriters worry you can’t handle another daily debit. If you already have multiple daily ACH pulls (from other advances), adding a new payment could trigger overdrafts. Other issues include incomplete statements (missing pages), deposits that are mostly transfers (not operating revenue), and sharp revenue drops (e.g., month 1 at $30,000, month 2 at $12,000). Quick fixes: clean up overdrafts, pay down existing advances, and wait for 2–3 months of stable deposits before reapplying.
How fast can I get funded with a merchant cash advance?
If your documents verify cleanly, MCA funding can be available within 1–2 business days after approval. Stripe notes this is typical. Verification delays (missing statement pages, identity checks, inconsistent deposits that need explanation) can add 2–5 days. The fastest approvals happen when you submit complete, clean bank statements, a government ID that matches your application, and a voided check or bank letter upfront. Some funders offer same-day funding if you apply early in the day and all documents are perfect.
Is an MCA a good idea if I’m already tight on cash flow?
If daily payments would cause overdrafts or missed payments, an MCA is usually too risky, and you should consider alternatives such as a line of credit or factoring. MCAs are designed for businesses with revenue that need a quick capital injection for a high-return use (such as buying inventory that will sell within weeks, funding a proven marketing campaign, or bridging a short gap until a large customer payment arrives). They are not designed to cover chronic cash shortfalls, make payroll for months, or pay off other debt (unless it’s a consolidation MCA that lowers your total daily payment). Run the self-audit in this guide: if adding the MCA payment would push you negative during a normal slow week, the amount is too high, or the product is the wrong fit.
Can I get an MCA if I was declined for a bank loan?
Yes—bank declines often happen because banks prefer stronger credit and fixed-payment affordability, while MCAs underwrite to revenue patterns. If your deposits are steady and your bank statements are clean, you may still qualify. Traditional banks decline up to 80% of small business applications, which is why alternative financing has grown. The key difference: banks want fixed monthly payments you can afford based on tax returns, credit score, and collateral. MCAs collect daily or weekly payments based on your sales, so the risk adjusts with your revenue. If a bank declined you, gather your last 3–6 months of business bank statements, check for red flags (NSFs, overdrafts, stacking), and clean them up if needed before applying for an MCA.
Merchant Cash Advance Requirements – Final Thoughts
If your credit score is around 600 and you need fast business funding, a merchant cash advance can work—but only if your bank statements are approval-ready and you compare offers carefully. The underwriting process hinges on consistent deposits, an average daily balance, limited NSF and overdraft activity, and room in your cash flow for daily or weekly remittances. Run the self-audit before you apply, fix any red flags (incomplete statements, excessive NSFs, heavy stacking), and always use the offer scorecard to compare total payback, payment method, and estimated APR.
United Capital Source can help you navigate this process. Want to know if your bank statements are MCA-ready? United Capital Source can review your last 3–6 months of statements, explain what underwriters will flag, and bring you multiple offers you can compare safely—so you can choose the lowest-risk option for your cash flow. Get pre-qualified today and see your options across MCAs, lines of credit, term loans, and invoice factoring in one place.
Don’t accept the first MCA offer you receive. Use this guide to audit your statements, calculate your payment room, and demand transparency from funders. The right advance at the right price can fuel growth. The wrong advance can trap you in a cycle of expensive refinancing. Choose wisely.
References
- Federal Reserve – Consumer & Community Context (March 2025) – Cited for MCA usage statistics: 37% of small employer firms applied for loans, lines of credit, or merchant cash advances in 2023; 70% approval rate by online lenders.
- Stripe – How a merchant cash advance works – Cited for typical documentation (3–6 months of bank statements, processing statements) and funding speed (1–2 business days).
- Credibly – Merchant Cash Advance – Cited for baseline requirements: 500+ credit score, 6+ months in business, $15,000+ monthly revenue.
- Allied Market Research – Merchant Cash Advance Market – Cited for market size: $17.9 billion in 2023, projected $32.7 billion by 2032.
- Management.org – Merchant Cash Advance overview – Cited for high effective APR range context: 80% to 200%+ depending on structure.
- eCapital – Why SMBs Are Considering Alternative Business Financing in 2023 – Cited for bank decline trend: traditional banks declining up to 80% of small business applications.
