How to Pre-Qualify Merchants for MCA

One of the biggest differences between successful and struggling ISOs lies in how well they pre-qualify merchants before submitting deals. Submitting every lead without proper review may seem productive, but it often leads to rejections, frustrated merchants, and lost credibility. Pre-qualification is not just a checklist. It is a strategy that shows you understand both your merchant’s situation and the funder’s expectations.

Why Pre-Qualification Matters

In the MCA space, funders work fast. They expect ISOs to send clean, fundable files that align with their underwriting criteria. When you send a merchant who clearly does not qualify, it not only wastes the funder’s time, but also damages your relationship with them. On the other side, merchants who are not prepared for funding or who misunderstand what MCA actually is can create major communication breakdowns.

That’s why smart ISOs focus on matching the right merchant with the right funder — and that starts with a strong pre-qualification process. Asking the right questions early prevents delays and builds confidence in your deal quality. It also helps you identify red flags that could kill a deal before it even gets submitted.

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Key Areas to Review When Pre-Qualifying a Merchant

These are the core factors you should review before deciding to move forward with a merchant submission:

• Monthly revenue: Most funders look for consistent gross monthly revenue, typically above $10K. Fluctuating deposits or seasonal gaps may signal instability.

• Time in business: Funders usually require at least 6 months of operating history. Startups or side gigs often don’t meet the threshold.

• Bank activity: A healthy business bank account with frequent deposits and low negative balances is a strong signal.

• Existing loans or positions: Stacked advances or open loans with high balances reduce eligibility and raise risk.

• Industry type: Some industries are higher risk (e.g., travel, cannabis) and may be restricted by certain funders.

• Chargebacks or returns: Frequent chargebacks indicate customer dissatisfaction or instability.

• Owner responsiveness: If the merchant is difficult to reach, slow to respond, or unclear on why they need funding, it can delay or derail the process.

• Legal and business structure: LLCs and incorporated entities are often preferred. Sole props may have limited options depending on the funder.

Reviewing these details helps you understand if the merchant is ready — not just financially, but logistically and mentally — for the MCA process. That preparation improves your chances of a fast and clean approval.

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The Bigger Picture

Pre-qualification also gives you a chance to educate the merchant. Many business owners hear about MCA from a friend or online, but don’t really know what it is. Explaining how it works, what the repayment will look like, and how it differs from a traditional loan helps them make an informed decision. It also positions you as a knowledgeable and trustworthy guide, not just a middleman.

Pre-qualifying merchants is one of the most important habits you can develop as an ISO. It saves time, builds funder trust, and improves your overall approval rate. Instead of thinking of it as an extra step, view it as a competitive advantage. The more selective and strategic you are, the faster you’ll grow in this industry.

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