The Ultimate MCA Underwriting Checklist for Funders

A consistent, documented underwriting process is the difference between a profitable MCA portfolio and one filled with defaults. Whether you are a direct funder or an ISO submitting deals to multiple funders, having a standardized checklist ensures no critical factor is missed on any file.

Required Documents Checklist

Every MCA file should include: three to six months of business bank statements (most recent), a signed merchant application with owner signature, a voided business check or bank letter confirming account details, government-issued photo ID of all owners with twenty percent or more ownership, business license or proof of business registration, most recent three months of credit card processing statements if applicable, and prior MCA contracts or payoff letters for stacking situations.

Financial Analysis Checklist

When reviewing the financial data, confirm the average daily balance meets the minimum threshold, verify average monthly gross revenue is consistent with stated figures, flag any month with more than three NSFs, check that there are fewer than five negative balance days per month, confirm deposit frequency (minimum ten to fifteen deposits per month expected), identify all active MCA balances and calculate existing RTR, and note any significant revenue fluctuations or declining trends.

Risk Factor Checklist

Review business age (minimum six months, prefer twelve or more), confirm the industry type is not on the restricted list, check owner credit for recent bankruptcies, tax liens, or judgments, verify the business location matches the stated address, assess revenue source diversity, and flag excessive ATM withdrawals in cash-heavy businesses.

Decisioning Checklist

Determine the approved advance amount based on monthly revenue multiple, set the factor rate based on risk tier, calculate payback amount and RTR percentage, confirm term length is appropriate for cash flow, review the deal against funder-specific guidelines and overlays, and document decline reasons clearly if not approving.

A thorough underwriting checklist is your first line of defense against portfolio losses. Build the habit, train your team, and enforce it on every single file — no exceptions.

At Target Underwriting Solutions, our trained underwriters follow a rigorous, customized checklist tailored to each funder's specific guidelines. We handle the full process — from document collection to final decision memo — so your team can focus on origination and growth.