Documents Needed to Apply for a Merchant Cash Advance
Documents Needed to Apply for a Merchant Cash Advance
Getting a merchant cash advance can be a great way for small businesses to quickly access capital. Unlike traditional bank loans, merchant cash advances provide funding based on a business’s credit card sales rather than credit score or collateral. The application process is also much faster, with funding possible in as little as a few days.
But what documents do you need to apply for a merchant cash advance? Here’s an overview of the key items lenders will want to see.
Business Bank Statements
Lenders will request several months’ worth of business bank statements, usually the last 3-6 months. They review deposits and withdrawals to verify revenue and get a sense of cash flow. Statements also show consistent credit card deposits from sales. Consistent deposits bolster the case for approval and may help secure better terms.
Merchant Processing Statements
These statements from your credit card processor provide detailed information about your credit and debit card transactions. Processing statements show key data like average monthly sales volume, which helps lenders determine approval amounts and terms. Providing the last 3-6 months of statements is common.
Photo ID
Lenders will ask for a photo ID like a driver’s license to verify your identity. For online applications, you can upload a scanned copy or photo of your ID. They may also ask for proof of address if the ID doesn’t include it.
Business License or Tax ID
Including a copy of your business license or tax ID number helps prove the legitimacy of your company. For online applications, you can upload a scanned copy of your business license. Your tax ID can simply be entered into the application form.
Profit and Loss Statement
A profit and loss statement summarizes your revenue, expenses, and net income over a period of time. It offers further insight into your finances. Some lenders may request a recent P&L, such as the last 3-12 months.
Accounts Receivable Aging Report
For businesses that invoice clients, an accounts receivable aging report outlines unpaid customer invoices and how long they’ve been outstanding. Having lots of unpaid invoices can indicate cash flow issues, so lenders may want to review.
Sales Projections or Forecasts
If available, providing sales projections or forecasts can give lenders greater confidence you’ll repay the advance. However, not all businesses create projections, so this isn’t always required.
Tax Returns
While not always mandatory, submitting your most recent business tax return can give lenders more insight into your finances. Personal tax returns may also be requested if you used personal funds to start the business.
Voided Check
You’ll need to provide a voided check from your business bank account so lenders can deposit the funds directly upon approval. For online applications, you can upload a scanned copy of a voided check.
Articles of Incorporation
If your business is structured as a corporation, limited liability company, or nonprofit, submitting your articles of incorporation proves you are registered as a legal business entity.
Additional Requirements
Depending on the lender, you may need to provide other documents as well, such as:
- Recent utility bill to verify your address
- Certificate of insurance
- Lease agreement if you rent your business property
- Inventory list
- Accounts payable aging report
Be prepared to submit any other documents the lender requests to complete their review. Having organized records will make the application process much easier.
Tips for a Smooth Application Process
Follow these tips when applying for a merchant cash advance:
- Choose an established lender with a good reputation
- Make sure you meet the basic eligibility requirements before applying
- Only apply for what you reasonably need and can afford to repay
- Gather required documents ahead of time so they’re ready to submit
- Triple check application information and documents for accuracy before submitting
- Provide clear, thorough explanations if requested by the lender
- Be responsive to lender inquiries to avoid delays
With the right preparation and documents in hand, getting a merchant cash advance can be a quick and straightforward process. Just make sure you understand the terms and only borrow what makes sense for your business situation and cash flow.
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