# MCA pre-funding checks

> Before wire release, funders run final verifications: bank balance confirmation, OFAC/AML sanction screening, prior-advance verification via Validis or Decision Logic, UCC re-search, and merchant phone verification — typically completed in 1–4 hours.

MCA pre-funding checks are the final verification steps a funder runs after underwriting approval but before wiring funds to a merchant. By 2026, these checks have become highly automated, but they still occasionally catch issues that derail funding at the last moment.

**The standard pre-funding check sequence.** Most funders run six checks in parallel:

1. **Final bank balance verification.** Funder re-verifies the merchant's bank account is active, has sufficient activity, and matches the deposit account on the application. Verified via Plaid, Yodlee, MX, or direct bank API.
2. **OFAC/AML sanction screening.** Funder runs the merchant entity, all owners with 25%+ ownership, and any guarantors through OFAC Specially Designated Nationals list, FinCEN watchlist, and PEP (Politically Exposed Persons) databases.
3. **Prior-advance verification.** Funder checks for any new MCA advances that were taken between application and funding — typically via Validis, Decision Logic, or industry-specific MCA lookup tools like the Co-Card MCA Database.
4. **UCC re-search.** Funder re-runs UCC search at state secretary of state to confirm no new UCC-1 filings have appeared since underwriting approval.
5. **Merchant phone verification.** Funder calls the merchant phone number on file to confirm identity, verify intent to accept funding, and confirm bank account ownership.
6. **Document verification.** Funder verifies signed contract, voided check, driver's license, and any other required documents are complete and consistent.

**Common reasons funding is held at pre-funding.** Six recurring issues:

1. **New MCA detected.** Merchant took a new advance between application and funding (often a stacking attempt with a competing funder); funder may re-underwrite or decline.
2. **Bank balance dropped.** Merchant's bank account balance dropped substantially between application and funding (often indicating cash management issues); may trigger re-review.
3. **New UCC filed.** Another funder filed a UCC after underwriting; changes the position and may require pricing adjustment or decline.
4. **OFAC hit.** Sanction screening returns a hit — usually a false positive due to common name, but requires manual review (24–48 hour delay) to clear.
5. **Phone verification failed.** Merchant unreachable or denies the deal — funder will not release funds without verbal confirmation.
6. **Document inconsistency.** Bank account on voided check doesn't match account on application; contract signature doesn't match driver's license name; etc.

**The mechanics — how long pre-funding takes.** Typical timing:

1. **Same-day funding (most common).** Application submitted in morning, underwriting approval by afternoon, pre-funding checks 1–2 hours, wire released same day.
2. **Next-day funding.** Application submitted afternoon, underwriting overnight, pre-funding checks morning, wire released next business day.
3. **Delayed funding.** Pre-funding check issue identified (OFAC, new UCC, phone verification); requires 24–72 hour delay for manual resolution.

**The strategic insight — what merchants should know.** Four points:

1. **Do not take additional MCAs while one is in underwriting.** Most funders will detect new advances in pre-funding via Validis or Decision Logic and decline; you lose the deal and may damage relationships with both funders.
2. **Keep your bank balance positive in the funding window.** Funders may pull funding if balance drops to negative or NSF status between approval and wire release.
3. **Be available for the verification call.** Merchant phone verification typically happens in a 30-minute window before wire release; missing the call delays funding by hours or days.
4. **Pre-funding can re-trigger underwriting.** A failed check doesn't just delay funding — it can trigger re-review that produces a different (often worse) offer.

**The mechanics — what funders are checking for fraud.** Four fraud indicators:

1. **Account ownership mismatch.** Bank account owned by someone other than the merchant (synthetic identity or first-party fraud).
2. **Document tampering.** Bank statements that appear altered; common red flags are inconsistent fonts, repeated transaction patterns, or pixel-level edits visible on close inspection.
3. **Identity verification failures.** Driver's license, SSN, or DOB inconsistencies across documents.
4. **Velocity patterns.** Same merchant submitting multiple applications across funders simultaneously; detected via shared industry fraud databases.

**The honest framing.** Pre-funding checks are the funder's last safety net — they catch the small but meaningful percentage of approved deals that should not actually fund. For merchants, the practical takeaways are: do not stack during the funding window, be reachable for verification calls, and ensure your application data exactly matches your documents. The vast majority of pre-funding checks complete in 1–4 hours and result in same-day or next-day funding; delays are usually caused by avoidable inconsistencies or attempts to stack mid-process. Merchants who treat pre-funding as a routine verification step — not as a final negotiation opportunity — close their funding cleanly. Merchants who attempt to manipulate documents or stack at the last moment typically lose the deal entirely.

## Related terms

- [MCA funding process (application to wire)](https://fundnode.co/llms/glossary/mca-funding-process) — The end-to-end MCA workflow: app + 3-6 months bank statements, soft-pull credit, paper-grade pricing, contract, ACH authorization, wire — typically 4 hours to 3 business days for clean files.
- [Bank statement underwriting](https://fundnode.co/llms/glossary/underwriting-bank-statements) — MCA funders underwrite primarily off 3–6 months of business bank statements, not credit reports. They look at average deposits, NSFs, negative days, and trend.
- [UCC filing (MCA)](https://fundnode.co/llms/glossary/uccs-and-mca-liens) — A public lien an MCA funder files against business assets, securing their position. Triggers credit-report flags and can block future funding from other lenders.
- [MCA bank statement analysis](https://fundnode.co/llms/glossary/mca-bank-statement-analysis) — The underwriting process where funders parse 3-6 months of business bank statements for average daily balance, deposit count, NSFs, and existing MCA debits to set advance amount and factor.

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Source: https://fundnode.co/glossary/mca-pre-funding-checks (HTML version)
Document: MCA pre-funding checks — Fundnode MCA Glossary
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