MCA Stipulations Explained: Every Document Funders Require to Fund a Deal

What Are MCA Stipulations?

In the merchant cash advance world, a stipulation (shortened to stip) is any document, condition, or piece of information that a funder requires before they will release capital to a merchant. Think of stips as the checklist that stands between an approved deal and a funded deal. See our MCA glossary for definitions of other core industry terms.

Most new brokers assume that once a funder issues an approval, the deal is essentially done. In reality, the stip phase is where many deals die - not because the merchant is unqualified, but because the wrong documents are submitted, information is missing, or the merchant ghosts the process. Understanding stips thoroughly is one of the clearest competitive advantages a broker can have.

This guide covers every major stipulation category, why funders require each one, and how to set up your merchant pipeline so deals fund faster with fewer surprises.

Why Funders Require Stipulations

Before diving into the document list, it helps to understand the funder's perspective. MCA funders are purchasing a percentage of future receivables - they are not making a loan. Because of this, they are underwriting business performance and owner character simultaneously. Stips serve three purposes:

• Verification: Confirming that what the merchant said on the application is accurate - revenue figures, business address, ownership, existing positions.
• Fraud prevention: Catching altered bank statements, phantom businesses, identity theft, and stacking abuse before capital goes out.
• Legal protection: Ensuring the agreement is signed by the actual business owner with authority to bind the company.

When you understand these goals, the stip list stops feeling like bureaucracy and starts feeling like a logical checklist you can help your merchant complete efficiently.

The Standard Stip Package

Most funders across the market require a near-identical set of core documents. Experienced brokers collect all of these before even submitting a deal so that approval-to-funding moves in hours rather than days.

1. Bank Statements

The single most important document in any MCA submission. Standard requirements:

• 3-6 months: Most A-paper and B-paper programs want 3 months; some want 4-6 months for larger advances or merchants with credit issues.
• Complete statements: All pages, including any pages marked 'intentionally left blank.' A 12-page statement that comes in as 10 pages will get kicked back.
• Clear and legible: PDF downloads direct from the bank's portal are strongly preferred over photographed paper statements. Funders' fraud detection algorithms flag image-quality issues.
• No alterations: Any whiteout, cropping, or pixel manipulation - even innocent formatting - can trigger a fraud hold. Use bank-direct downloads only.

Pro tip: If your merchant has multiple business accounts, submit all of them. Funders that see a primary account but suspect a secondary account exists will stip for it anyway. Getting ahead of this saves a round-trip. Use our underwriting calculator to estimate how the monthly average daily balance across accounts affects approval amounts.

2. Voided Check or Bank Letter

Funders need to verify the ACH routing and account number for debiting. A voided check (a physical check with 'VOID' written across it) is the traditional format. Many merchants have gone fully digital, so a bank-issued letter on official letterhead confirming the routing number, account number, and account holder name is an accepted alternative at most funders.

What does NOT work: a deposit slip (routing numbers on deposit slips differ from the ACH routing number at some banks), a screenshot of online banking, or a handwritten note from the merchant.

3. Driver's License or Government-Issued ID

Required for all owners with 20% or more ownership, and for any personal guarantors. Requirements vary by funder but generally include:

• Unexpired ID
• Both sides of the ID (front and back)
• Clear photo, not a dark or blurry phone snapshot
• Name must match the application and the business documents exactly - 'Mike' vs. 'Michael' can cause a hold

If an owner recently moved and the ID address does not match the application address, submit both the old ID and a utility bill or bank statement showing the new address. Getting ahead of this discrepancy avoids a back-and-forth.

4. Business License or Proof of Business

Funders need confirmation that the business legally exists and is currently active. Acceptable forms include:

• Active business license (state or local)
• Articles of incorporation or articles of organization
• Certificate of good standing from the Secretary of State (often required for larger advances)
• DBA filing documents if the business operates under a name different from the legal entity name

This stip matters more than many brokers realize. A business license showing an expired date or a suspended status with the state will kill a deal instantly. Before submitting, ask your merchant to confirm their entity is in good standing at the state level.

5. Signed MCA Agreement (Contract)

Once the funder issues an approval and the merchant accepts the offer, the actual purchase and sale agreement must be executed. Most funders now use DocuSign or similar e-signature platforms. Key points:

• All owners above the ownership threshold must sign
• The signature must match the name on file - an illegible scrawl where the name cannot be identified is a red flag at some compliance-heavy funders
• Date fields must be filled in; undated agreements get kicked back
• Some funders require a separate personal guarantee document in addition to the main agreement

6. Application

This seems obvious, but the signed application is often a distinct stip from the application a broker fills out on behalf of the merchant. Many funders require the merchant themselves to sign a data release authorization or a summary application confirming the information is accurate. This is also the document that captures Social Security numbers for the personal guarantee and credit pull consent.

Conditional and Deal-Specific Stips

Beyond the standard package, funders issue conditional stips based on what they see in the file. These are deal-specific and will appear in the approval letter. Experienced brokers learn to anticipate these based on the merchant's profile.

Landlord Letter

Required when a funder wants confirmation that the business is not at risk of being evicted in the near term. This is common for restaurants, retail, and other brick-and-mortar businesses, especially when the bank statements show sporadic deposits or the lease is near expiration. The landlord signs a brief letter confirming the tenant is current on rent and the lease is active. Getting a landlord to respond quickly is often the slowest part of this stip - coach your merchant to contact the landlord themselves and explain why it is needed.

Tax Returns (Business or Personal)

Funders may require 1-2 years of business tax returns for larger deal sizes (typically $100,000+), for A-paper programs seeking the lowest factor rates, or when bank statement revenue seems inconsistent with what the merchant claims. If the merchant is a sole proprietor, the personal Schedule C may substitute for business returns. Tax returns showing substantial losses relative to reported revenue can trigger a reduced approval or an outright decline.

Profit and Loss Statement

A current P&L (usually year-to-date or last 12 months) is sometimes required alongside tax returns for larger deals. Most funders accept accountant-prepared or bookkeeper-prepared P&Ls; some will accept a QuickBooks-generated report. The P&L does not have to be audited, but it needs to be internally consistent.

Proof of Ownership

When the ownership percentage on the application is not obvious from the business entity documents - common in multi-member LLCs or S-corps with multiple shareholders - the funder may require an operating agreement, partnership agreement, or corporate stock ledger showing each owner's percentage.

Existing Position Payoff Letters

If the merchant has existing MCAs on their file (detectable via UCC search or via ACH debit patterns visible on the bank statements), many funders require payoff letters from existing funders before they will fund. This is especially common for funders that prohibit stacking or that are taking a first-position security interest. The payoff letter shows the remaining balance and confirms the existing position will be cleared at funding. Learn more about buyout and payoff strategies in our dedicated guide.

Merchant Account Statements

For businesses that process credit cards (restaurants, retail, salons), some funders - particularly those offering split-funding (credit card holdback) deals - want to see 3 months of credit card processing statements in addition to bank statements. This verifies monthly card volume, average ticket size, and the processor relationship. See our article on ACH vs. split funding payment collection for how these programs differ.

Utility Bill or Proof of Address

Used to verify the business address when the bank statement mailing address, ID address, or application address don't fully match. A recent utility bill in the business name (within 90 days) is the cleanest form. If the business address differs from the owner's home address shown on the ID, be prepared to explain or document both.

Reference Letter or Trade Reference

Uncommon but occasionally seen on larger deals or for merchants in higher-risk industries. The funder wants confirmation from a vendor or business partner that the merchant is a legitimate, operating business. If you ever see this stip, move fast - getting trade references from merchants can be slow.

How Stips Vary by Funder and Program

One of the key skills for experienced brokers is knowing which funders have lighter stip requirements vs. heavier ones, and matching merchants accordingly. A few patterns worth knowing:

• A-paper programs typically have more stips because they are offering better rates and need to confirm the merchant truly qualifies for the preferred pricing.
• Speed-first funders advertising same-day or 24-hour funding often accept a lighter stip package (just bank statements and ID) but fund at higher factor rates as a tradeoff.
• Larger deal sizes almost always trigger more stips. A $25,000 advance and a $500,000 advance have dramatically different documentation requirements.
• Cannabis, trucking, and construction funders may require industry-specific licenses (cannabis dispensary license, DOT operating authority, contractor license) as additional stips.

When you search our funder directory, verified funders with claimed ISO rep profiles often specify their stip requirements in their program details - this helps you match deals before you even submit.

The Broker's Role in the Stip Process

The biggest mistake new brokers make is treating stips as the merchant's problem. In reality, the broker who helps their merchant collect and submit a clean stip package closes deals faster, earns better funder relationships, and generates more renewals. Here is a practical system:

Build a Pre-Submission Checklist

Before you submit any deal, collect the full standard stip package: 3 months bank statements, voided check, front and back of all owner IDs, and signed application. Tell the merchant you need these before you can submit. This single practice - collecting stips before submission rather than after approval - can cut your average time-to-fund by 2-3 business days.

Review Bank Statements Yourself

Look at the bank statements before the funder does. Check for NSF fees, negative balances, existing ACH debits from other funders, and any unusual deposit patterns. Understanding what the funder will see allows you to explain things proactively rather than reactively. Our bank statement analysis guide for brokers walks through exactly what to look for.

Set Merchant Expectations

Tell every merchant upfront that after approval, there will be a document collection phase and that their speed directly affects when they get capital. Merchants who understand this context move faster. Merchants who are surprised by stips after approval often feel the process is a bait-and-switch and disengage.

Use a Secure Document Collection Method

Emailing sensitive financial documents and IDs is a liability and a bad merchant experience. Use a secure document portal - many CRM platforms for MCA brokers include one, or you can use a tool like DocuSign's data room or a simple encrypted file-share. This is especially important for compliance as data protection regulations tighten.

Follow Up Strategically

When merchants are slow on stips, the most effective follow-up is urgency tied to the approval: 'Your approval expires in 48 hours and the rate is locked at today's terms - if we miss the window I have to resubmit.' This is usually accurate (most approvals are time-limited) and gives the merchant a concrete reason to prioritize.

Common Stip Mistakes That Kill Deals

Understanding what kills a deal in the stip phase is as important as knowing what funders want. The most common problems:

• Partial bank statements: Missing pages - even a 'page intentionally left blank' - triggers a retransmit request and delays funding by a full business day minimum.
• Altered statements: Even innocent reformatting (printing to PDF, changing the zoom level, or cropping headers) can trigger fraud detection. Always submit original bank-direct PDFs.
• Expired IDs: A driver's license expired last month will get kicked back. Check expiration dates before collecting.
• Name mismatches: 'Robert Smith' on the application, 'Bob Smith' on the ID, and 'R. Smith' on the lease are three different names in compliance systems. Make sure everything matches.
• Missing owner signatures: If the business has two 50/50 owners and only one signs the agreement, the deal will not fund until both sign. Identify all required signers at submission.
• Voided checks vs. deposit slips: A deposit slip looks like a check but uses a different routing number at some banks. Always require an actual voided check or a bank letter.

What Happens After Stips Are Satisfied

Once the funder's compliance team confirms all stips are satisfied, the deal moves to final funding review. At most funders, this is a same-day process if stips are cleared before their cutoff time (often 2-3 PM EST for next-day ACH funding). The funder wire or ACH goes to the merchant's bank account, and your commission is paid according to your ISO agreement - typically the same day or within 24 hours of funding.

After funding, the clock starts on the payment schedule. This is when your ongoing relationship with the merchant becomes valuable - merchants who feel well-served in the stip and funding process are far more likely to call you first when they need a renewal. Learn how to build a renewable income stream from repeat fundings.

Practical Takeaway for Brokers

The stip process is one of the highest-leverage places to differentiate yourself as an MCA broker. Funders reward brokers who submit clean files - some funders have internal ratings for ISO quality based on how complete and accurate submissions are, and those ratings directly affect the deals you get access to and the pricing you can offer.

Build the habit of collecting a complete stip package before every submission. Review it yourself before it goes to the funder. Set clear expectations with your merchant about what is coming. And when conditional stips come in, move on them the same day - delays in stip collection are the number-one preventable reason deals fall apart after approval.

If you are building your broker business and looking to connect with funders that have clear stip requirements and fast funding timelines, search our MCA funder directory to find verified funders with ISO rep contacts, or create your free broker account to unlock direct messaging with funders in your network.