Merchant Cash Advance Declined: Why Applications Fail & What to Do Next

Quick Answer: Why Was My Merchant Cash Advance Declined?

A merchant cash advance application can be declined for many reasons. A rejection does not necessarily mean the business cannot obtain an MCA elsewhere, because providers can use different underwriting criteria and have different risk appetites.

Common reasons can include:

• insufficient card or online sales;
• falling or inconsistent turnover;
• not enough trading history;
• existing finance commitments;
• recent adverse credit;
• bank account conduct;
• high refunds or chargebacks;
• sector restrictions;
• the amount requested being too high;
• payment-processor incompatibility;
• incomplete or inconsistent information; or
• the application simply falling outside that provider's criteria.

MAS View: An MCA decline should be treated as information, not simply a reason to submit the same application to five more providers. The first question should be: what caused the decline, and is that issue specific to one provider or to the underlying business?

Does an MCA Decline Mean You Cannot Get Funding?

No.

Merchant cash advance providers do not necessarily assess every business in the same way.

One provider may be comfortable with:

• shorter trading history;
• a particular sector;
• higher average transaction values;
• certain ecommerce platforms;
• adverse credit;
• a particular payment processor; or
• a seasonal sales pattern.

Another may not.

That means there is an important difference between:

“This provider declined the application”

and:

“The business is not currently suitable for merchant cash advance funding.”

Understanding which situation applies should come before submitting another application.

For an overview of how MCA funding works, read our Merchant Cash Advance UK guide.

The MAS MCA Decline Framework

When an application has been declined, Merchant Advice Service recommends reviewing:

Decline Reason → Sales → Cash Flow → Existing Finance → Credit → Payment Setup → Provider Fit → Next Step

1. Your Card Sales May Be Too Low

Merchant cash advance funding is closely connected to business sales.

A provider may look at how much eligible revenue the business generates before deciding:

• whether to offer funding;
• how much to offer; and
• what collection level may be sustainable.

If sales are below the provider's minimum criteria, the application may fail even where the business has an otherwise strong credit profile.

There is no single minimum monthly turnover that applies across every MCA provider.

This is why applying to a provider whose criteria fit the merchant matters.

2. Sales May Be Falling or Too Inconsistent

Headline turnover does not tell the whole story.

A business might process £100,000 in one month but £40,000 the next.

Providers may therefore look at trends across several months rather than relying on one strong period.

Questions may include:

• Are sales growing or declining?
• How seasonal is the business?
• Has there been a sudden recent fall?
• Are a small number of customers responsible for most revenue?
• Are refunds reducing net sales materially?

A seasonal business is not automatically unsuitable for an MCA, but the provider may want enough history to understand the normal trading pattern.

3. You May Not Have Been Trading Long Enough

A newer business gives an MCA provider less historical information to assess.

A provider may want evidence showing that:

• the business has established trading activity;
• sales are recurring rather than one-off;
• payment volumes are reasonably predictable; and
• the business can continue operating while the MCA is collected.

Minimum trading-history requirements vary between providers.

If the only reason for decline is limited trading history, waiting until more trading evidence is available may sometimes be more sensible than immediately applying elsewhere.

4. You May Already Have Too Much Business Finance

Existing borrowing can affect an MCA application.

Providers may consider:

• business loans;
• existing merchant cash advances;
• overdrafts;
• asset finance;
• invoice finance;
• other revenue-based facilities; and
• regular repayment commitments.

The important issue is the amount of cash flow left after those commitments are taken into account.

For example, a business may have strong card sales but already be using a significant proportion of its available cash to service other finance.

Adding another collection could make the arrangement commercially unsustainable.

5. The Funding Amount Requested May Be Too High

A declined application does not always mean the provider is unwilling to fund the business at all.

Sometimes the amount requested is not supported by the merchant's turnover, financial position or existing commitments.

A business requesting £100,000 may potentially receive a different outcome if an appropriately structured £40,000 requirement better matches its sales and cash flow.

That does not mean businesses should automatically reduce the funding request simply to secure approval.

The funding still needs to be sufficient for its intended purpose.

MAS View: The right funding amount is not the largest advance a provider is willing to offer. It is the amount that solves the business requirement without unnecessarily damaging future cash flow.

Find Your New Processor

6. Bad Credit, CCJs or Defaults May Affect the Application

A poor credit history does not necessarily lead to an automatic MCA decline, but it can form part of the underwriting decision.

A provider may look at:

• business credit history;
• director credit information where relevant;
• CCJs;
• defaults;
• late payments;
• historic business failures;
• existing borrowing; and
• recent financial conduct.

The age and seriousness of the event can matter.

A historic satisfied CCJ can present a different picture from several recent unpaid judgments alongside deteriorating sales.

If adverse credit is part of the problem, read Merchant Cash Advance With Bad Credit: Can You Still Qualify?.

7. Your Business Bank Statements May Raise Concerns

Business bank statements can provide information beyond headline revenue.

A provider may identify:

• frequent returned payments;
• persistent overdraft pressure;
• unexplained large transfers;
• tax or creditor arrears;
• other finance deductions;
• significant reductions in cash balance; or
• inconsistencies between stated turnover and actual activity.

These do not necessarily result in rejection individually.

But combined with other concerns they can change the overall underwriting picture.

8. High Refunds or Chargebacks May Reduce Usable Sales

An MCA provider is interested not simply in gross payment volume, but in the reliability of the revenue behind it.

A merchant processing £200,000 per month with substantial refunds and chargebacks can present a different position from another processing the same amount with stable net sales.

Higher chargebacks may also indicate:

• customer dissatisfaction;
• fraud;
• future-delivery exposure;
• subscription cancellation issues; or
• wider payment risk.

This can be particularly relevant for merchants already operating within sectors considered higher risk by payment providers.

9. Your Industry May Be Outside the Provider's Appetite

Some MCA providers restrict the industries they support.

This can happen even where a business has:

• strong turnover;
• a long trading history;
• good cash flow; and
• an acceptable credit profile.

The issue may simply be sector appetite.

Businesses operating in sectors with:

• higher chargebacks;
• long future-delivery periods;
• complex regulation;
• volatile revenues;
• subscription billing; or
• reputational or legal risk

may have a smaller provider pool.

This is where provider matching can be more useful than repeatedly applying to general MCA providers.

10. Your Payment Processor May Not Be Compatible

This is an important reason that is often overlooked.

The MCA provider may need a way to identify or collect the agreed proportion of eligible sales.

Depending on the arrangement, this may interact with:

• the merchant's card processor;
• Merchant IDs;
• settlement;
• payment gateways;
• EPOS;
• ecommerce platforms; or
• other connected sales data.

A merchant can therefore be financially suitable for funding while its current payment arrangement does not fit the provider's collection model.

This is not the same as failing a credit assessment.

Read our guide to Merchant Cash Advance and Your Payment Processor.

Do You Have to Change Card Processor After an MCA Decline?

No — and businesses should be cautious about assuming that changing processor is automatically necessary.

First establish whether processor compatibility actually caused the decline.

If it did, ask:

• Can another MCA provider work with the existing processor?
• Would the proposed finance genuinely justify changing the payment arrangement?
• What would the new processing rate be?
• Are new terminals or integrations required?
• What happens to the current payment contract?
• Will settlement change?

MAS View: If obtaining a relatively small funding facility requires changing a payment arrangement processing millions of pounds annually, the payment cost can be as important as the finance cost.

11. Information in the Application May Not Match

Inconsistent information can create underwriting concerns.

Examples include:

• turnover quoted on the application not matching statements;
• different trading names;
• unclear company ownership;
• incorrect processor information;
• undeclared existing finance;
• out-of-date company information; or
• business activity that differs from the description supplied.

Some discrepancies are innocent and easily explained.

But inaccurate or incomplete information can slow the application or cause a provider to decline where it cannot become comfortable with the business.

12. The Provider May Simply Not Be the Right Fit

This is one of the most important distinctions.

A rejection can reflect the provider's own commercial criteria rather than a serious problem with the merchant.

Providers can differ on:

• minimum turnover;
• maximum advance size;
• industries supported;
• credit appetite;
• trading history;
• payment processors supported;
• ecommerce versus face-to-face businesses;
• seasonality; and
• existing finance.

This is why identifying the decline reason matters before deciding what to do next.

What Should You Do Immediately After an MCA Decline?

Before submitting another application, take the following steps.

1. Ask why the application was declined. The provider may not always give a detailed explanation, but obtain whatever information is available.
2. Check the application data. Make sure turnover, company information, finance commitments and processor details were correct.
3. Review recent sales. Look at the same trends the provider is likely to see.
4. Calculate existing commitments. Understand how much cash flow is already being used for finance.
5. Check your credit position. Identify any adverse information before another application.
6. Check payment compatibility. Establish whether the processor or settlement setup caused the problem.
7. Decide whether the issue can actually be changed.

Only then should the business decide whether another provider, a later application or a different form of finance makes more sense.

Should You Apply to Several MCA Providers After Being Declined?

Not automatically.

Submitting applications indiscriminately can create unnecessary work and may still produce the same result if there is a fundamental issue with the business.

For example, if the actual problem is rapidly declining revenue, applying to five additional providers does not change the sales data.

Similarly, if the first provider simply does not support the merchant's sector, finding a provider with a different appetite may be entirely reasonable.

The distinction is:

business problem vs provider-fit problem.

How Soon Can You Reapply for a Merchant Cash Advance?

There is no universal waiting period across the market.

The right timing depends on why the first application failed.

Can a Broker Help After an MCA Decline?

Potentially.

The value of a broker or matching service after a decline is not simply submitting the same application more widely.

A useful intermediary should help identify:

• why the original application may have failed;
• which providers are more relevant to the business;
• sector restrictions;
• turnover criteria;
• credit appetite;
• processor compatibility; and
• whether another finance structure may make more sense.

Read Merchant Cash Advance Broker vs Direct Provider.

What Information Should You Prepare Before Applying Again?

The exact documentation varies, but businesses may be asked for information including:

• recent payment-processing statements;
• business bank statements;
• company information;
• director or ownership information;
• existing finance details;
• proof of trading;
• processor information;
• sales data; and
• an explanation of significant adverse events where relevant.

Having this ready can reduce delays and help identify issues before another application is submitted.

What if You Were Declined Because of Bad Credit?

First establish what the adverse-credit issue actually is.

The next step may depend on whether it involves:

• a historic CCJ;
• a recent unpaid judgment;
• a company default;
• director credit;
• several existing facilities;
• limited credit history; or
• ongoing financial distress.

Providers can treat these differently.

Our dedicated guide explains how bad credit can affect merchant cash advance eligibility.

What if Your MCA Application Keeps Being Declined?

Repeated declines are a reason to stop and review the underlying requirement.

Ask whether:

• the business is applying for too much;
• sales are currently strong enough;
• existing finance is creating affordability pressure;
• the business is targeting the wrong providers;
• the sector is difficult for MCA providers;
• the payment setup is causing compatibility problems; or
• merchant cash advance is actually the right form of finance.

The answer may be to improve the application.

It may be to wait.

Or it may be to consider a different funding structure entirely.

What Other Finance Could You Consider?

Depending on the business requirement, alternatives may include:

• business loans;
• revolving credit;
• invoice finance;
• asset finance;
• overdraft facilities;
• revenue-based finance; or
• other working-capital options.

The British Business Bank describes merchant cash advance as one of several working-capital finance options and notes that eligibility and suitability vary according to the business and funding requirement.

Read our comparison of Merchant Cash Advance vs Business Loan vs Revenue-Based Finance.

Don't Accept Any Offer Just Because You Were Previously Declined

A previous rejection can create urgency.

That can make businesses more likely to accept the next available offer without properly comparing it.

Before proceeding, review:

• the amount received;
• total amount to be collected;
• collection percentage;
• expected duration;
• other fees;
• early-settlement terms;
• processor requirements;
• contractual restrictions; and
• the effect on working capital.

Our Merchant Cash Advance Costs guide explains how to compare offers using the total commercial cost rather than focusing only on the cash advanced.

Check Who You Are Dealing With

The regulatory position of commercial finance varies according to the provider, product, borrower and activity involved.

FCA registration should not automatically be treated as equivalent to full FCA authorisation.

The FCA has specifically warned that some commercial lenders and related firms are registered only for anti-money-laundering supervision as Annex 1 firms. This is different from the wider authorisation regime, and the broader FCA conduct rules and Financial Ombudsman Service protections do not automatically apply to those firms.

Businesses should understand:

• who is actually providing the finance;
• which company the agreement is with;
• the provider's regulatory status where relevant;
• what complaints process applies;
• the complete commercial terms; and
• what protections are available.

How Merchant Advice Service Can Help After an MCA Decline

Merchant Advice Service helps businesses assess merchant cash advance options and the payment infrastructure supporting them.

Where a merchant has already been declined, we can look at factors including:

• why the original application failed;
• business turnover and sales profile;
• adverse credit;
• existing finance;
• provider criteria;
• business sector;
• card processor compatibility;
• online-payment arrangements;
• the funding amount required; and
• whether another provider appears to be a better fit.

Our approach is:

Understand the Decline → Assess the Business → Check Provider Criteria → Check Payment Compatibility → Compare the Commercial Terms

Merchant Advice Service does not provide the underlying MCA and cannot guarantee that any provider will approve an application.

Our matching and introduction service is free to businesses. MAS may receive commission or a referral fee from a commercial partner where a business proceeds following an introduction.

You can also browse Merchant Cash Advance Providers within The Payments Directory®.

Learn more about how Merchant Advice Service works.

Find Your New Processor

Related Merchant Cash Advance Guidance

• Merchant Cash Advance UK
• Merchant Cash Advance With Bad Credit
• Merchant Cash Advance Broker vs Direct Provider
• Merchant Cash Advance Costs Explained
• Merchant Cash Advance and Your Payment Processor
• Merchant Cash Advance for Online Businesses
• Merchant Cash Advance vs Business Loan vs Revenue-Based Finance

Sources & Further Reading

• British Business Bank – Small Business Guide to a Merchant Cash Advance
• British Business Bank – Working Capital Finance Options
• British Business Bank – What Is Working Capital Finance?
• Financial Conduct Authority – Risks When Dealing With Unregulated Lenders
• Financial Conduct Authority – Increased Scrutiny of Annex 1 Firms

Editorial & Commercial Disclosure

This guide provides general information about merchant cash advance applications and common factors that can affect provider decisions.

Each MCA provider sets its own underwriting and eligibility criteria. A previous decline does not guarantee either approval or rejection by another provider.

Merchant Advice Service does not provide the underlying merchant cash advance and does not make funding or underwriting decisions.

MAS may receive a commission or referral fee from some commercial partners where a business proceeds following an introduction. Our matching and introduction service is free to businesses.

The regulatory treatment of commercial finance depends on the agreement, borrower, provider and activities involved. Businesses should confirm the status and protections applicable to any specific arrangement before proceeding.

This article is general information and should not be treated as legal, accounting, tax or regulated financial advice.

Read more about how Merchant Advice Service researches and compares providers and our research and data methodology.