Do I Need Tax Returns to Get a Merchant Cash Advance?
Usually not for smaller advances, since most funders size an MCA from bank statements alone. Larger amounts, lines of credit and some revenue-based financing programs do ask for a business tax return or financial statements.
Why are statements enough for most files?
Funders buying future sales care most about what your account shows right now. Recent statements show deposits, balances and existing payments in a current, verifiable form. A tax return is a look back at a year that already ended, and by the time an owner files, it can be well out of date. For a short advance, statements answer the questions a funder cares about.
When do tax returns come into play?
- The advance is large compared with a typical file.
- You're applying for a business line of credit with a longer relationship.
- A revenue-based financing funder wants to see annual revenue and margins.
- Your statements show something unusual, like a big drop, and the funder wants the full picture.
- You're consolidating several advances and the funder wants confidence in the business's longer history.
What if you haven't filed recently?
Owners who are behind on taxes worry this ends the conversation. Often it doesn't, especially for an advance based on statements. What matters is whether the IRS has a lien against the business or a payment plan in place. A federal tax lien is public and shows up in searches, so tell us about it. Many funders will work with an installment agreement that's current.
What else can stand in for returns?
Instead of a tax return, some funders accept a year end profit and loss statement, a balance sheet or a processing history. Have whatever your bookkeeper already produces ready to send. Nothing you prepare for a funder should differ from what you file with the IRS.
Does a line of credit need tax returns?
If a business line of credit is on your list, expect tax returns to matter more. A line stays open for a longer stretch, and funders offering one want a broader view of the business than a few months of statements. Having your most recent business return, and ideally the one before it, ready to go makes that conversation much faster. If your return shows a loss because of depreciation or a one time cost, a short note from your accountant helps a funder see the real picture.
How do you send returns securely?
Tax returns carry your Social Security number and a lot of private detail. Send them only through the secure upload link we give you or by email to info@afterfirstmca.com, and only when a funder actually needs them.
How can Afterfirst help with this?
Call 877-FUND-654 and tell us how much you're looking for and what you use it for. We'll tell you whether your file needs tax returns at all. If it does, we'll say which year and which forms before anything goes out.
What else do owners ask about this?
- Do funders look at profit or revenue for an MCA?
- Can I use a merchant cash advance to pay a tax bill?
- Can a home based business get a merchant cash advance?
More short answers on this topic are on the your business and your file 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.