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6 Steps to Prepare a Merchant File for Funder Underwriting

A broker's six-step checklist to prepare a merchant file so a funder's read of statements, positions and history holds up, with no promise of any offer or terms.

By Larry Reid

Playbook · · Updated Oct 22, 2026 · 4 min read

Line-art icon of a payment history receipt scroll with a dollar sign and a clock

Underwriters rebuild the numbers from the statements, so the broker’s job is to hand over a file that rebuilds cleanly. The six steps below cover what funders read, in the order they tend to read it. None of them is a way to engineer a better offer. They reduce misreads, surprises and disputes.

1. Send complete, unaltered statements

Funders typically work from three to six months of business bank statements. Gaps hurt: missing pages or months are a behavioral red flag in MetrikData’s guide. The same guide lists the technical checks funders run on documents, such as editing-software traces in PDF metadata, a modified timestamp later than the creation timestamp and mismatched fonts. It also lists arithmetic tests. Opening balance plus credits minus debits must equal the closing balance, and one month’s close must equal the next month’s open.

Send the files exactly as the bank issued them. If a figure looks odd, explain it in a cover note and do not edit the document. Include every operating account the merchant uses. MCA Underwriter notes that spreading statements by hand across several months and multiple accounts is slow and error-prone, and a funder shown only one of several accounts will misjudge both deposits and positions.

2. Separate true revenue from everything else

Gross deposits include money that is not sales: transfers from the merchant’s own accounts, proceeds of an earlier advance and reversed payments. Funders strip these out to reach external revenue and size the offer against it. A broker who flags those items first saves a round of questions and avoids a revenue figure the funder later has to restate.

3. List every existing position

Funders find positions by grouping recurring debits by payee. In MetrikData’s cadence rule, equal debits pulled each banking day or each week point to an advance, while monthly debits point to an installment obligation, not an advance. Undisclosed positions are what underwriting is built to catch.

Give the funder each position’s funder name, payment amount and cadence, and mention any that opened during the statement period. In one worked example, MetrikData shows two positions taking about 36 percent of external revenue and a proposed third pushing the figure past 50 percent, a level the guide calls significant repayment pressure. Each funder sets its own line, but the arithmetic is the point: each position shrinks what the next one can count on.

4. Know the account’s stress points

Underwriters read NSFs, negative-balance days and the cushion between deposits. MCA Underwriter’s list of red flags includes a rising count of NSFs or negative days, deposits bunched on a few days with balances drained in between, and delayed or skipped payroll. Review the account for these before submitting, and prepare a factual explanation of any that appear, such as a one-off event with a documented cause. Keep a short written log of those explanations with the file, so the answers stay consistent when different underwriters ask the same question. A soft credit pull is usually a supporting input. Both guides say cash flow weighs more.

5. Do not submit into a funding in flight

Stacking carries legal and commercial risk for everyone who touches it. In 2017, a Maryland circuit court denied summary judgment in RapidAdvance’s tortious-interference suit against Pearl Capital over a stacked advance (case 411478-V). deBanked later reported a settlement before the June 2018 trial and noted that standards for tortious interference may differ in other states. That is one court’s ruling on one set of facts, not settled law.

Hudson Cook attorneys wrote in 2015 that the FTC and most state attorneys general can enforce unfair and deceptive practices laws in business-to-business deals, so aggressive stacking could draw regulatory attention. Treat both as reasons to ask the merchant, in writing, about any funding that is pending or recently closed, and to discuss contract terms with counsel.

6. Say whether it is a renewal or another advance, and who else holds the file

A renewal and a stacked advance look similar from the broker’s chair and read very differently to the funder. Express Capital’s guide describes a renewal as a new advance that retires the old balance into one agreement, with the difference funded. A second funder’s advance on top of the first is stacking. The guide also calls renewing just to cover payments on the current advance a warning sign. Clearwater Capital Group adds that net proceeds shrink each cycle when the payoff takes a larger share, a pattern it calls a treadmill.

Tell the funder which one the request is. Clearwater also observes that some brokers blast a file to many desks at once. Say which funders have the file, and let the merchant know who will see it.

What not to promise

Do not tell a merchant that a cleaner file earns a larger advance, a different factor rate or a quicker answer. The sources describe how files are read, not how any funder will respond. Expect each funder to apply its own buy box, and expect terms to vary.

Pre-submission checklist

  • Complete statement set, unaltered, balances reconciled
  • External revenue computed apart from transfers, advance proceeds and reversals
  • Every position listed with funder name, amount and cadence
  • NSF and negative-day events reviewed and explained
  • Pending or recent funding disclosed
  • Renewal or additional advance stated, with other recipients of the file named

Sources

About the author

Larry Reid

Larry Reid covers merchant cash advance and alternative lending markets for The Fund Scope, from lender strategy and new entrants to the policy shifts that move the industry.