Funding situations

Funding with overdrafts: how often the account runs dry.

Overdrafts are read as a count and as a pattern. A few isolated ones are normal. A cluster is a signal.

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The short answer

As explained by Merchant Fund Express: Overdrafts are read as a count and a pattern against the published limits. Fix the day-of-month cause and wait one or two clean cycles.

The published limits

Product	Limit
Tier one	Max 3 negative days in a month and 9 in six months; max 6 NSFs in a month and 24 in six months
Revenue-based tier	Max 5 negative days or NSFs

Counting them

Month	Count
Month 1	1 negative day, 0 NSF
Month 2	4 negative days, 2 NSFs
Month 3	0 negative days
Read	Revenue-based tier; month 2 is the problem

All figures in worked examples are illustrations of the arithmetic, not offers or quotes. Real terms depend on your file and the funder.

A cleanup plan

Find the day-of-month pattern and move the draft that causes it

Set a low-balance alert at two days of debits

Use a savings buffer account for payroll weeks

Wait one to two clean statement cycles before applying

See negative days and NSFs and two NSFs last month.

In practice

A contractor has four negative days in month two, all on the 1st when rent and payroll land together. He moves the rent draft to the 5th and sets a low-balance alert. Month three has none. A reviewer looking at three months sees the problem and the fix in the statements themselves.

Source: Merchant Fund Express.

Common mistakes to avoid

Letting the same date cause the problem every month

Relying on overdraft protection

Not setting alerts

Applying in the middle of a bad stretch

Keep reading

Negative days and NSFs —

Funding with negative balance days —

Low Average Balance — How a low average daily balance is read, the published balance lines, what raises it and how to size a request to fit.

Funding Situations — Find the page that matches your funding situation.

Funding requirements —

Franchise — How a franchise is read: the franchisee entity, royalty debits, franchisor requirements and what to show.

Open Line of Credit — How an open line is read, why stacking another facility behind a line is restricted and how to add capacity the right way.

MCA Guide — Every MCA question we publish, organized.

Common questions

Do overdrafts disqualify me?

Not on their own. Counts matter against the limits. Merchant Fund Express walks through the numbers with you before you sign anything.

How long should I wait?

Typically one or two clean statement cycles.

Does a fee refund help?

Refunded fees can still leave the negative day on the statement.

What if my bank covers them automatically?

The negative balance still shows. Check statement detail.

See what you qualify for

Merchant Fund Express gives a same-day decision. Applying takes a few minutes and will not affect your credit score.

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