Restricted Industries: Meaning in a Merchant Cash Advance
Restricted industries are lines of business that a funder won't write or writes only under tighter terms. Each funder keeps its own list, based on risk, regulation or its investors' rules.
What does restricted industries mean?
Funders avoid industries where revenue is hard to verify, where legal risk is high or where businesses fail at high rates. Lists vary a lot, so an industry one funder refuses can be routine for another. Some industries aren't banned outright but face lower maximums or shorter terms.
Why does restricted industries matter to your business?
If your industry sits on a funder's list, no amount of revenue changes the answer. Knowing which funders accept your industry before sending the file saves time and avoids needless credit inquiries. It is one of the main places where a broker who knows funder lists earns their keep.
Which industries are often restricted?
- Firearms and ammunition sellers.
- Cannabis and some related businesses.
- Adult entertainment.
- Some financial services, like check cashing or debt collection.
- Some trucking or auto sales files, depending on the funder.
Why describe your business accurately?
Say clearly what the business does and where most revenue comes from. A precise description helps the right funders say yes and keeps a file from being misread as something it isn't.
What about mixed businesses?
If your company does more than one thing, like a convenience store that also sells vape products, tell the funder how revenue splits between them. Many funders look at the main source of income rather than rejecting the whole file for a small side line.
Where will you see it?
In funder guidelines shared with brokers. In quick declines that cite the industry. On your application, where the industry and business description are the first things an underwriter reads.
Which terms are related to restricted industries?
The full list is in the glossary. Owners ask about this in Do funders look at profit or revenue for an MCA?.
A term on your offer you don't recognize?
Send us the line and we'll tell you what it means. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.