Guide
How to analyze business bank statements for a merchant cash advance
To analyze bank statements for a merchant cash advance, first confirm that each statement balances to its own printed totals. Then check the file for tampering and remove non-revenue credits to get true revenue. Next, list existing advance payments by lender and measure daily balances, NSFs and negative days. Finally, size the new payment against true revenue.
Last updated: . Funder guidelines differ, so treat thresholds as your funder's call, not a rule.
The short answer
- Gather the right statements
- Confirm each statement balances
- Check the document itself
- Calculate true revenue
- Find existing positions
- Read the daily balance picture
- Size the payment: holdback and debt ratio
- Write it up
Step 1: Gather the right statements
Collect every page of the business bank statements for the months the funder requires, for every operating account. Missing pages hide deposits and advance payments.
Step 2: Confirm each statement balances
Check that opening balance + credits − debits = closing balance, and that the running balance moves correctly from line to line (reconciliation). If it doesn't tie out, find out why before going further.
Step 3: Check the document itself
Look for figures that contradict each other, the same statement submitted twice, and deposits that don't fit the business.
Step 4: Calculate true revenue
Start from total credits and remove what isn't sales:
- MCA and loan funding (a liability, not income)
- Transfers between the merchant's own accounts
- Owner injections
What remains is true revenue. Record what you removed and why. Easify's approach is described under true revenue, not gross deposits.
Step 5: Find existing positions
Find recurring debits to funders and funding deposits from them, then group them by lender. That's the merchant's current stack of positions.
Step 6: Read the daily balance picture
For each month, record:
- Average daily balance (ADB): the account's typical cushion
- Negative days: days the account closed below zero
- NSFs: returned items for non-sufficient funds
Read the trend, not a single month.
Step 7: Size the payment: holdback and debt ratio
Payback and daily payment
Payback = advance amount × factor rate
Daily payment = payback ÷ number of payment days in the term
Holdback
The holdback is the share of the merchant's receipts that goes to repayment. To see the share a fixed payment implies, divide the payment by true revenue for the same period:
Implied holdback = daily payment ÷ average daily true revenue
Debt ratio
Funders define this differently, so state which definition you use. Two common ones:
- Payment-to-revenue = total existing MCA payments in a period ÷ true revenue in the same period.
- Debt-to-revenue = MCA funding received in a period ÷ true revenue in the same period.
A $30,000 advance at a 1.35 factor rate has a payback of $40,500. Over 120 payment days, that's $337.50 a day. If true revenue averages $90,000 a month across 22 business days, average daily true revenue is about $4,090, so the implied holdback is about 8.3%. Add the existing positions' payments to see the merchant's total burden.
Step 8: Write it up
Put true revenue by month, positions by lender, daily-balance metrics, flags and proposed terms in one report that can be checked against the statements.
Doing this in Easify
Easify does steps 2 to 8 from the statement PDF: it balances each statement (flagging files that don't reconcile), flags contradictory documents, duplicate uploads and suspicious deposits, calculates true revenue, lists positions by lender, and reports NSFs, negative days and ADB by month. The offer calculator covers step 7 and the funder-ready PDF report covers step 8. See Easify for funders or for brokers, the MCA underwriting glossary, or the whole MCA underwriting platform.
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FAQ
How do MCA funders analyze bank statements?
They confirm the statements are complete and balance, check for tampering, then calculate true revenue by removing funding, transfers and owner injections. They then look at existing advance payments, daily balances, NSFs and negative days before sizing a payment against true revenue.
How do you calculate holdback for a merchant cash advance?
The holdback is the share of receipts that goes to repayment. For a fixed daily payment, divide the daily payment by average daily true revenue to get the implied holdback percentage.
How do you calculate debt-to-revenue for an MCA?
Divide MCA funding received in a period by true revenue in the same period. Many funders also look at payment-to-revenue, which is existing MCA payments divided by true revenue. Always state which definition you're using.
What is true revenue?
True revenue is the deposits that come from the business's sales. It excludes MCA and loan funding, transfers between the merchant's own accounts and owner injections.
Why does it matter that a statement balances?
If opening balance plus credits minus debits doesn't equal the closing balance, transactions are missing or misread. Revenue, positions and balances calculated from that file can't be trusted.