A merchant cash advance is a sale, not a loan. The funder buys a slice of your future receivables at a discount today, and you pay it back through a daily ACH or a percentage of card sales until the agreed total payback is met. The whole cycle — from application to funded — typically runs 24 to 48 hours. Here's the actual sequence.
The 6 stages, in order
- Application (10-15 minutes). Business name, EIN, time in business, average monthly deposits, owner's name and SSN for soft credit pull. No financials at this stage.
- Bank statement upload (5 minutes). Last 3-4 months of business bank statements, usually via Plaid read-only link or PDF upload. This is where underwriting starts.
- Underwriting review (2-6 hours). The funder reads deposit volume, average daily balance, NSF count, existing debits to other funders, deposit consistency. They're not pulling credit hard yet.
- Offer (same day). One or more offers come back: advance amount, factor rate, term in months, daily payment, total payback. Read every line.
- Contract + verification (2-4 hours). If you accept, you sign the agreement. Bank verification call confirms account ownership and active status.
- Funding (next business day). Capital lands by ACH. Daily payments start the following business day.
What underwriters actually look at
The 30-second version: deposit consistency matters more than total revenue. A business doing $80K/month in steady $20K weekly chunks underwrites cleaner than a business doing $120K/month with one $90K deposit and three light ones.
- Average monthly deposits. $10K minimum to qualify with most funders. $25K+ unlocks better factor rates.
- Average daily balance. Healthier balance = lower factor rate. Balance trending up week-over-week is a green flag.
- NSF count. Insufficient-funds returns in the last 90 days. 3+ raises factor rates or kills the deal entirely.
- Existing position count. First-position MCA gets best rates. Stacking a 2nd or 3rd advance gets progressively more expensive — sometimes prohibitively.
- Time in business. 4 months minimum at most direct funders. 12+ months unlocks the best paper.
How repayment works in practice
Two structures dominate: daily ACH (most common) and percentage of card sales (split processing). On daily ACH, the funder debits a fixed amount Monday-Friday. A $50K advance at 1.32 factor over 8 months breaks down to roughly $412/day. On split processing, the merchant processor sends a fixed percentage (usually 8-15%) of every batch directly to the funder.
The reconciliation right matters. If revenue drops in a real way — slow month, seasonal dip — most reputable funders will lower the daily for a billing cycle when you provide updated bank statements showing the dip. This is contractually required in some state-disclosure jurisdictions and offered as a courtesy in others. Get it in writing before you sign.
What can derail it
- Statements show heavy debits to other funders the funder didn't know about
- Bank verification call fails — wrong account, wrong owner, account closed
- Last 30 days of deposits are 40%+ below the trailing 3-month average (revenue cliff)
- Open tax lien or active judgment that the application missed
None of these are dealbreakers automatically — they reshape the offer (smaller advance, higher factor, second-position pricing) or push to a different funder.
Sources & References
- Bank denial and small business credit access figures cited in this piece are derived from the Federal Reserve Small Business Credit Survey. Approval rates for small business credit applications at large banks have ranged from approximately 13%-31% across recent survey years, depending on bank category and reporting period.
- Small business finance landscape and lending program data: SBA Office of Advocacy.
- Merchant cash advance industry standards and disclosure practices: Small Business Finance Association (SBFA).
- Commercial financing disclosure regulations referenced (NY FAIR Act, CA SB 1235/666/362, VA, UT) are summarized from the published statutes; consult counsel for specific compliance application.