When your business needs capital quickly, a merchant cash advance (MCA) can provide access to funds faster than any other type of financing. Unlike loans that scrutinize your credit history and require extensive documentation, MCAs focus primarily on your business’s monthly revenue and your last 4 months of business bank statements. Understanding the qualification requirements can help you determine if this funding option is right for your business.
We’ve worked with hundreds of small business owners over the years, and one of the most common questions we hear is: “Will I even qualify?” The good news is that merchant cash advances are designed to be accessible, even for businesses that struggle to get financing.
Merchant Cash Advance Qualifications & Requirements
Merchant cash advance providers evaluate applications differently than other types of lenders. Instead of focusing heavily on credit scores and collateral, they’re primarily interested in your business’s ability to generate consistent revenue and a strong accounts receivable. Below are the key qualifications most providers require.
1. Monthly Revenue
The most critical factor in qualifying for a merchant cash advance is your monthly revenue, typically in the last 4 months. Most providers require businesses to have a minimum amount of average monthly revenue. This requirement ranges from $5,000 to $10,000, with many providers setting the threshold at $7,500 or higher.
Your monthly revenue matters because the advance is repaid through a percentage of your expected accounts receivable. Higher revenue not only makes you more likely to qualify but can also help you secure larger advance amounts with better terms. Providers use this metric to confirm there’s enough consistent revenue to support repayments.
Llama Loan can help: Even if you’re slightly below the typical threshold, we work with multiple providers who have varying minimum requirements. We can match you with funders who may approve lower revenue based on other strong qualifications. Contact us today to get started!
2. Time in Business
Most MCA providers require your business to have been operating for at least six months. This minimum operating history allows providers to evaluate your sales patterns and assess the stability of your revenue stream.
Newer businesses may still qualify if they demonstrate strong sales performance, but established businesses with longer operating histories typically receive more favorable terms. The longer you’ve been in business, the more data providers have to assess your risk level. If your business has a shorter history, you may need to wait before applying.
Llama Loan can help: If your business is just shy of six months old but showing exceptional sales growth, reach out to us. We have relationships with select providers who occasionally make exceptions for rapidly growing businesses with strong fundamentals.
3. Bank or Processor Statements
You’ll need an active business bank account with at least three months of statements available for review. Providers examine your bank statements or merchant processor statements to verify your sales volume, assess cash flow patterns, and confirm that your business has sufficient activity to support the advance repayment.
Some MCA providers may ask for six months of statements instead of three. This gives them a more detailed view of your revenue patterns over time and helps them better understand seasonal fluctuations or growth trends in your business.
4. Minimum Credit Score
While many MCA providers don’t require a minimum credit score, most look for a personal credit score of at least 550. You don’t need perfect credit, but providers use your score to help assess repayment risk and determine the terms of your advance.
If you’ve been turned down for traditional financing due to credit issues, an MCA might still be an option. However, keep in mind that lower credit scores may result in higher factor rates and less favorable terms.
Llama Loan can help: Poor credit doesn’t automatically disqualify you. We specialize in finding providers who look at the complete picture of your business, not just your credit score. If your sales are strong, we can often secure funding even with credit challenges.
5. U.S. Residency and Age Requirements
You must be a U.S. citizen or legal resident and at least 18 years old to apply with most MCA providers. This is a standard requirement across the industry to ensure legal compliance.
6. Business Registered in the U.S.
Many MCA providers require your business to be legally registered and physically located in the United States. Some may not accept applications from offshore businesses or those using PO boxes as their primary business address.
7. Legal Business Entity
Some providers require that your business be structured as a sole proprietorship, LLC, or corporation. Informal or unregistered businesses may not qualify, as providers need legal assurance that they’re entering into a valid commercial agreement.
8. Ownership Percentage
Some MCA providers will only fund you if you own at least 50% of the business. This ensures the person signing the agreement has legal authority to enter into the contract and make binding financial decisions on behalf of the company.
Llama Loan can help: If you own less than 50% but have authorization from other partners, we can connect you with providers who may work with minority owners when proper documentation is provided.
9. Daily Balances and NSF History
Providers may review your daily bank balances and check for non-sufficient funds (NSFs). Frequent overdrafts or volatile cash flow may result in a smaller offer or a decline. Maintaining consistent positive balances demonstrates financial stability and responsible cash management.
Llama Loan can help: If you’ve had recent NSF issues but have since stabilized your cash flow, let us know the circumstances. We can help you present your application in the best light and connect you with providers who consider recent improvements.
10. Industry Restrictions
Many providers do not fund businesses in high-risk sectors like cannabis, adult entertainment, online gambling, or firearms. These industries face regulatory issues or elevated chargeback risks that make them too risky for most MCA providers.
Providers typically favor businesses in industries with high credit card transaction volumes, such as:
- Restaurants and food service establishments
- Laundromats
- Retail stores and boutiques
- Professional services (salons, spas, fitness centers)
- Medical and dental practices
- E-commerce businesses
- Hotels and hospitality
These industries naturally process a significant portion of their revenue through credit and debit cards, making them ideal candidates for merchant cash advances. If your business operates in a high-risk sector, you may need to seek specialized funding sources.
11. Use of Funds
Some funders want to know how you plan to use the money. While most allow flexible use, they may ask to confirm that the funds will support business operations rather than personal expenses or prohibited activities. Common acceptable uses include inventory purchases, equipment upgrades, marketing campaigns, or covering temporary cash flow gaps.
12. Government-Issued ID
Nearly all MCA providers require a valid form of identification—usually a driver’s license or passport. This is a standard identity verification step during the onboarding process and helps prevent fraud.
13. Bankruptcy or Legal Judgments
If you’ve filed for bankruptcy or have open tax liens or court judgments, some providers may decline your application or offer reduced funding. Others may still consider your application depending on the age and severity of the issue. Recent bankruptcies typically present more challenges than those that occurred several years ago.
Llama Loan can help: Past bankruptcies don’t mean you’re out of options. We work with providers who consider how long ago the bankruptcy occurred and whether you’ve rebuilt your business since then. If it’s been over a year and your business is performing well, we can likely find you funding.
14. Existing MCA or Loan
If your business already has an outstanding advance or business loan, some MCA providers may require stacking consent from your current funder. Others may not allow a second position at all, as multiple advances can strain your cash flow and increase the risk of default.
We always advise clients to be upfront about existing obligations as it can help expedite the process.
Factors That Directly Affect Your Advance Amount
Meeting the minimum qualifications gets your foot in the door, but several factors determine how much funding you can access.
Monthly Revenue
Your average monthly revenue for the last 3 to 4 months directly influences your advance amount. Most providers offer advances ranging from 60% to 200% of your average monthly revenue, with special cases going to 300%. Businesses with higher, more consistent monthly revenue can typically secure larger advances.
Financial Stability
Providers review your bank statements to assess financial stability. Consistent positive balances, regular deposits, and healthy cash flow patterns can help you qualify for larger amounts with better terms. Businesses showing steady growth or stable revenue patterns are viewed more favorably.
Existing Obligations
If you already have outstanding merchant cash advances or other business debts, providers will factor these obligations into their decision. Multiple existing MCAs may limit the size of additional advances you can obtain, as providers want to ensure your business can handle the combined repayment burden.
Improving Your Chances of Qualification
If you’re concerned about qualifying for a merchant cash advance, several strategies can strengthen your application.
Start by increasing your credit card processing volume, this is the easiest way to show revenue on paper. Encourage customers to pay with cards by offering convenient payment options and avoiding cash-only policies. Building a few more months of operating history can also improve your position, particularly if you’re a newer business.
Maintain healthy bank account balances and avoid overdrafts in the months leading up to your application. Clean up any outstanding issues with existing creditors and ensure all tax obligations are current. Address any NSF incidents and work to stabilize your daily cash flow.
Finally, work with experienced funding specialists who can help you understand your options and connect you with providers suited to your business profile. The right guidance can make the difference between approval and rejection, especially if your situation is complex or you’re in a borderline qualification category.
Is a Merchant Cash Advance Right for Your Business?
Qualifying for a merchant cash advance is generally easier than obtaining other types of financing, but that doesn’t mean it’s always the best choice. The costs associated with MCAs make them most suitable for businesses with immediate capital needs, strong sales performance and the ability to pay back the loan quickly. Many MCA providers offer prepayment terms that significantly lower the cost of the loan, so if you are just having a tough month, this could be the ideal financing for you.
Before applying, carefully evaluate whether the benefits of quick funding outweigh the expensive repayment terms. Consider your revenue and whether you can afford to have 10% to 20% of your revenue directed to repayment. Review your existing obligations and ensure you’re not over-leveraging your business.
For businesses with time-sensitive opportunities or emergency needs, the trade-off may be worthwhile despite the higher costs. However, if you have time to explore alternatives, traditional bank loans or lines of credit may offer more affordable financing options.
Ready to explore your options? At Llama Loan, we offer a variety of loan products, including term loans and lines of credit, and make the qualification process simple. We’ve worked with hundreds of business owners to help them secure the financing they need to grow their business. Get in touch with us today to get started!