Before sharing a merchant's financial records or signing an MCA agreement, identify the funding entity and understand who will service the transaction. A broker may arrange an advance, but the contract should make the responsible parties clear.
Identify the funder and any intermediary
Ask whether the person quoting terms is the funder or a broker. Confirm the legal name on the agreement against the relevant business registry. Ask who makes the final credit decision, who receives payments, and whom to contact after funding.
Compare written terms
- Amount advanced, total amount to be remitted, payment frequency, and estimated duration
- Factor rate or other pricing measure and the dollar cost of funding
- All broker, origination, and administrative fees
- Reconciliation provisions, default terms, guarantees, and collection process
- Existing advances and whether additional positions are permitted
Compare the complete agreement with the initial quote. If a material term changes, ask for an explanation in writing and review the revised economics before signing.
Check the track record
Ask for references from merchants or brokers with comparable transactions. Review public enforcement and court records where relevant, and verify any claimed registration or licensing with the appropriate state regulator. Requirements depend on the transaction and jurisdiction.
LendLedger's public directory preview can help identify counterparties. Full directory details require an approved account. Profiles and reviews are context, not a substitute for checking the contract and funding entity directly.
Questions to ask before submitting a package
- Who is the funder of record and who services the advance?
- What information will be shared with other funding companies?
- How do payments change if business revenue falls?
- What happens if a payment is missed or the business closes?
- Who can explain the final contract and all fees?
Frequently asked questions
What is an MCA funder?
An MCA funder provides capital under an agreement for a portion of future receivables. Payment frequency and reconciliation terms vary. Some funders work through brokers or independent sales organizations.
How do I know if an MCA funder is legitimate?
Start with state business registration records to confirm the entity exists and is in good standing. Search for litigation history, check for compliance with applicable commercial financing disclosure laws, and look for reviews on third-party platforms. Asking the funder directly whether they are the funder of record — or brokering to a third party — is a basic but important step.
What is the difference between a direct MCA funder and a broker?
A funder provides capital under the agreement; a broker helps place the transaction and may receive a fee. Ask who makes the credit decision, holds the contract, and services payments.
What are the biggest red flags when evaluating an MCA funder?
Unexplained fee changes, unclear payment obligations, missing contract parties, and pressure to sign before reviewing terms deserve further investigation. Seek written clarification before committing.
Are MCA funders regulated?
Applicable rules vary by state, transaction, and provider. Check current commercial financing disclosure and registration requirements with the relevant regulator for your transaction.
What questions should I ask an MCA funder before submitting a deal?
Ask whether they are the direct funder or brokering to a third party, what their stacking policy is, how they handle defaults and modifications, what states they are registered in, and who the account manager will be after funding. Legitimate funders expect these questions and answer them directly.
Where can I find verified profiles of MCA funders and private lenders?
LendLedger offers a public directory preview of lender, operator, and broker profiles. Full directory details require an approved account. Verify material claims directly with the funder and relevant records.