MCA Approval Range
The approval amount is the maximum MCA funding the funder will extend to a specific merchant — calculated from underwriting analysis of revenue, time-in-business, industry, credit, and existing debt — typically expressed as a range with the merchant selecting actual funded amount within range.
Why This Matters
Approval amounts establish the upper bound of funder appetite for a specific merchant. Common calculation methodology: 50-150% of average monthly deposits (varies by funder), with adjustments for time-in-business, industry risk, existing debt positions, and credit profile. Most underwriting produces a range (e.g., $30K-$60K approved range) with merchant selecting actual amount based on specific capital need. Higher approval amounts typically reflect stronger underwriting profiles. Multi-funder shopping often produces varying approval amounts across funders — strongest funder match may not be the highest approval amount but rather the best overall structure (factor rate × amount × terms).
Frequently Asked Questions
Frequently Asked Questions
How do MCA funders calculate approval amounts?
Most funders use 50-150% of average monthly deposits as starting calculation, with adjustments for time-in-business, industry risk, existing debt positions, and credit profile. Specific methodology varies by funder. Most underwriting produces an approval range rather than fixed amount, allowing merchant selection within range.
Should merchants always take the maximum approval amount?
Not necessarily — taking maximum often imposes faster repayment timeline and higher monthly cash flow burden. Match advance amount to specific capital need rather than maximum availability. Larger advances also typically carry slightly worse pricing terms than right-sized advances within approval range.