Do I Need a Business Bank Account to Get an MCA?
Yes, in practice you do. Funders collect payments from a business checking account and read that account's statements to size the offer, so an owner running everything through a personal account gets very few offers until the sales flow through a business account.
Why do funders insist on a business account?
A merchant cash advance is based on the money your business takes in. The funder's whole picture of your business comes from the deposits it sees, and the payments come out of the same account by ACH. When sales land in a personal account mixed with groceries and a car payment, the funder can't tell what the business actually earns, and many contracts forbid collecting from a personal account at all. There's also a legal side. The contract is with the business, so the funder wants the business entity to own the account the payments come from.
What if you've been using a personal account?
You're not alone. Plenty of sole proprietors and new LLC owners run the first stretch of the business through personal checking. Here is what tends to help:
- Open a business checking account in the business's legal name, with the same EIN on your paperwork.
- Point your card processor, your delivery apps and your customer payments to the new account.
- Keep personal spending off it. A clean account reads better than a busy one.
- Keep the personal statements handy. A few funders will look at them alongside a young business account to understand your history.
How does a young business account affect your offer?
Funders size offers off consistent months of deposits. A business account with only a short history gives them less to go on, so the first offer tends to be smaller or the list of interested funders is shorter. As the account builds a track record, the picture improves quickly.
How should sole proprietors and new LLCs set it up?
If you're a sole proprietor without an EIN, you can still open a business checking account at most banks under your own name and a business name. Funders read those accounts the same way, as long as the business deposits flow through them. If you formed an LLC, open the account in the LLC's exact legal name. A name mismatch between the contract and the bank account is one of the small things that slows a file down at the finish line. Keep in mind that a business account is useful well beyond funding. It keeps your taxes cleaner, makes your bookkeeper's life easier and gives you a record you can point to the next time anyone asks what the business earns.
How can Afterfirst help with this?
Call 877-FUND-654 and tell us how your deposits are set up right now. If you already have a business account, send the recent statements and we'll shop them. If you don't, we'll tell you straight whether it makes sense to wait a bit or whether a funder in our network will look at what you have today.
What else do owners ask about this?
- Can I get an MCA if I just opened a new business bank account?
- Will a funder look at my personal bank account?
- What does a funder ask on the verification call?
More short answers on this topic are on the applying FAQ, and the funder fit checker runs the numbers for your own file.
Have a question we didn't answer?
Ask us on the call. 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.