Starting an MCA Funding Company: Build Policy First

Before funding your first deal, write the credit policy that will actually run your book. Here is where to start.

Starting an MCA funding company usually begins with capital, a CRM, and a list of ISOs ready to send paper. What it should begin with is a written credit policy, finished before the first contract gets signed. I have watched new funders start taking submissions with nothing more than a gut feel for what a good deal looks like, and within six months they are approving files that contradict each other because every underwriter on staff is making up the rules as they go.

A credit policy does not need to be long. It needs to answer the questions you will face on day one and day one hundred the same way. What is your minimum time in business. What NSF day count kills a file outright versus flags it for a second look. What stacking position you will take, and whether you will fund behind a daily debit already in place or only behind weekly. What DSCR floor you will not go under regardless of how clean the bank statements look otherwise. Write these down as actual rules, not guidelines, so the first underwriter you hire isn't inventing policy on a Tuesday afternoon under deadline pressure from a broker who wants an answer in twenty minutes.

The mistake I see most often in new shops is treating underwriting guidelines as something you'll formalize later, once volume justifies it. By the time volume shows up, you already have a portfolio built on inconsistent decisions, and untangling that after the fact means re underwriting deals you've already funded just to understand your own risk exposure. It is much cheaper to spend two weeks before launch writing kill criteria, renewal rules, and stacking limits than to spend two years discovering them reactively through losses. The policy also gives you something concrete to hand a new underwriter instead of three months of shadowing a senior person who might leave before the knowledge transfers.

One more thing worth deciding early: how you will track exceptions to your own policy, because you will make them. A funder with no mechanism for logging why a deal got approved outside guidelines has no way to tell, a year later, whether those exceptions were smart risk calls or slow leaks that have been adding up the whole time. At Ultimate Underwriting we spend a fair amount of time with new funds rebuilding the policy they should have written on day one, and it is always faster to do it right before you have a book to untangle.