Bank Statements Analysis
Bank statements analysis is the systematic underwriting review of merchant business bank statements — typically 4-6 months — extracting average monthly deposits, deposit frequency, ending balance patterns, NSF history, and existing debt servicing to determine MCA approval and pricing.
Why This Matters
Bank statements analysis methodology: identify revenue deposits (vs transfers, refunds, loans), calculate average monthly deposits and trend, assess deposit frequency and consistency, review average ending balance (cash cushion), count NSF/overdraft incidents (negative signal), identify existing MCA payments (stacking risk), and flag concerning patterns (declining trend, large irregular transfers, sudden balance fluctuations). Modern underwriting increasingly automates analysis through OCR and machine learning while maintaining human review for nuanced judgment. Statement analysis quality drives underwriting accuracy and portfolio performance.
Frequently Asked Questions
Frequently Asked Questions
Why are 4-6 months of statements required?
Captures revenue stability assessment (single month is insufficient), identifies trend (improving/declining/stable), and surfaces seasonality. Three months minimum for thinnest underwriting; six months for substantial advances or complex businesses.
What signals concern in bank statements?
Multiple NSF incidents, declining deposit trend, large unexplained transfers in/out, existing daily MCA debits, multiple overdraft fees, and inconsistent deposit patterns. Each signal triggers additional underwriting investigation.