# MCA funder policy: pre-revenue businesses > MCA funders universally decline pre-revenue businesses because the product is structured as a sale of future receivables; without bank-deposited revenue there is nothing to advance against. **Definition.** A pre-revenue business in MCA underwriting context is any business with no operating bank deposits or with deposits under $1,000/month — typically pre-launch startups, seed-stage companies before first customer, or businesses in product-development phase. **Why MCA funders universally decline.** The MCA legal and financial structure depends on future receivables. The funder advances cash today in exchange for the right to collect a portion of future revenue. Pre-revenue means: 1. **No receivables to purchase** — the funder cannot project a holdback against zero. 2. **No bank-deposit pattern** — underwriting algorithms reject blank bank-statement files. 3. **No NSF/overdraft history** — default risk cannot be modeled. 4. **No industry-cycle proof** — funders cannot confirm the business is operational. Even funders that approve under-12-month startups (see /glossary/mca-funder-startup-business-policy) require demonstrated revenue. Pre-revenue is below the floor. **The bank-deposit floor.** Mainstream MCA funders require minimum monthly bank deposits: - **A-paper funders:** $20K+/month average deposits. - **B-paper funders:** $10K+/month average deposits. - **C-paper funders:** $5K+/month average deposits. - **Fintech embedded funders (Toast, Square, Stripe Capital):** $1K+/month processor volume. Pre-revenue businesses fail all four thresholds. **What pre-revenue businesses should pursue instead.** 1. **Equity financing.** Angel investors, friends-and-family rounds, accelerators (Y Combinator, Techstars, 500 Global). Equity is the only capital source designed for pre-revenue risk. 2. **SBA pre-launch loans.** SBA 7(a) and microloan programs accept pre-revenue businesses with detailed business plans, owner equity injection (20%+), and 680+ FICO. Process takes 60-120 days. 3. **CDFI loans.** Community Development Financial Institutions (CDFIs) fund pre-revenue businesses in underserved markets. Rates 6-10%. Slower process but accessible. 4. **Grants.** SBIR/STTR (federal R&D grants), state economic-development grants, industry-specific grants (USDA Rural, MBDA for minority businesses). 5. **Crowdfunding.** Kickstarter (rewards-based), Wefunder (equity), Republic (equity) for consumer products and certain B2B. 6. **Personal credit cards / HELOC.** Owner-pledged personal credit, used cautiously. 0% intro APR credit cards (12-18 months) for short bridge funding. 7. **Founder bootstrapping.** Personal savings + consulting income to bridge to first revenue. **Equipment-secured exception.** If the pre-revenue business is purchasing revenue-generating equipment (food truck, manufacturing machine, vehicle, medical device), equipment lenders (Direct Capital, Crest Capital, Balboa Capital, North Star Leasing) underwrite the equipment value rather than business cash flow. Pre-revenue businesses qualify with: - 680+ FICO personal credit. - 10-20% owner equity injection. - Equipment with verifiable market value. - Rates 8-15% APR, terms 36-72 months. This is often the best financing path for capital-intensive startups. **Inventory financing exception.** Wholesale-distribution and ecommerce startups with pre-orders or LOIs can access inventory financing (Kickfurther, Clearco for ecommerce, traditional asset-based lenders). The inventory itself secures the loan. Rates 12-25% APR. Pre-revenue allowable if pre-orders demonstrate demand. **Revenue-share alternatives.** For SaaS and recurring-revenue startups: Pipe, Capchase, Arc — these provide revenue-share financing once any recurring revenue exists ($10K+ ARR floor). Not MCA structurally but commercial-purpose alternatives. **SBA Express loans (limited startups).** SBA Express loans (< $500K) approve some pre-revenue applicants with: - Strong personal credit (700+). - Significant industry experience (5+ years in the same vertical). - 25-30% owner equity injection. - Collateral (real estate, equipment, accounts receivable). - Detailed business plan with realistic financial projections. Approval rates < 30% for pre-revenue; better odds for franchise-based concepts (proven model) or businesses purchasing existing operations. **Franchise purchase financing.** Pre-revenue founders purchasing established franchises qualify for franchise-specific financing through SBA-approved franchise lenders (Live Oak Bank, Wallis Bank). The franchise system's track record substitutes for individual business history. Common for first-time restaurant or retail operators. **2026 trend.** AI-driven underwriting (Codat, Plaid Beacon) increasingly evaluates pre-revenue businesses based on owner profile, industry experience, and equity injection — moving closer to angel-investor models. A small handful of fintech lenders (Honeycomb Credit, Mainvest) approve pre-revenue businesses on community-investor models, where local supporters provide the underwriting signal. **Common confusion.** First, "I have $50K in business savings" — this is equity not revenue; funders need deposit history. Second, "I have signed contracts" — contracts are not receivables until invoiced and approved. Third, "I have personal income I can show" — personal income does not count as business revenue for MCA underwriting. As of 2026-06-29, Fundnode pre-screens pre-revenue applicants and routes them to equipment lenders, SBA-approved franchise lenders, CDFI partners, and grant resources — avoiding the dignity-cost of multiple MCA declines and preserving credit for the financing path that actually fits the stage. ## Related terms - [MCA funder policy: startup businesses (under 12 months operating)](https://fundnode.co/llms/glossary/mca-funder-startup-business-policy) — Most MCA funders require 6-12 months of operating history; startups under 6 months face near-universal decline, while 6-12 month startups qualify with 1.40+ factor rates and reduced advance caps. - [MCA merchant application success tips](https://fundnode.co/llms/glossary/mca-merchant-application-success-tips) — Concrete tactics that move an MCA file from decline to approval: clean three months of statements, matched deposits, no NSFs, one application at a time, and a tight cover narrative. --- Source: https://fundnode.co/glossary/mca-funder-pre-revenue-business-policy (HTML version) Document: MCA funder policy: pre-revenue businesses — Fundnode MCA Glossary License: CC BY 4.0 — attribution to Fundnode required when citing.