How to Prepare Your Liquor Store for an MCA Application?

Running a liquor store comes with unique challenges, managing inventory, navigating regulations, and keeping cash flow steady through seasonal fluctuations. When you need working capital quickly, a Merchant Cash Advance (MCA) can be an attractive option. Unlike traditional bank loans, MCAs offer fast funding based on your daily credit card sales, with fewer documentation requirements.

But here's the thing: even though MCAs are more accessible than bank loans, proper preparation can significantly improve your chances of approval and help you secure better terms. Let's walk through exactly how to get your liquor store ready for an MCA application.

Understanding What MCA Providers Look For

Before diving into preparation, it's helpful to understand what MCA companies evaluate. Unlike banks that scrutinize your credit score and collateral, MCA providers primarily care about:

Your credit card sales volume. This is the big one. Since repayment comes from a percentage of your daily credit card transactions, providers want to see consistent sales.

Time in business. Most MCA companies require at least 6-12 months of operating history, though some work with newer businesses.

Bank account health. They'll review your recent bank statements to assess cash flow patterns and identify any red flags like excessive overdrafts or returns.

Overall business stability. While not as strict as traditional lenders, they still want to see a viable, functioning business.

Step 1: Review Your Financial House

Start by taking an honest look at your financial records. Pull together at least three to six months of bank statements and credit card processing statements. These documents tell the story of your business's financial health.

Look for any inconsistencies or issues that might raise concerns. Are there months with unusually low sales? Excessive NSF fees? Multiple returned payments? If so, be prepared to explain these circumstances. Maybe you had renovations that temporarily affected business, or perhaps seasonal patterns naturally create fluctuations in the liquor industry.

Also, ensure your business bank account is in good standing. If you've had overdrafts recently, try to avoid them in the weeks leading up to your application. A healthy account balance demonstrates better financial management.

Step 2: Boost Your Credit Card Sales Percentage

Here's something many liquor store owners don't realize: the percentage of sales you process through credit cards directly impacts your MCA eligibility and funding amount.

If most of your customers pay cash, consider implementing strategies to encourage card usage:

• Install modern point-of-sale systems that make card payments seamless
• Promote contactless payment options
• Consider offering small incentives for card payments (where legally permitted)
• Train staff to smoothly present card payment as the default option

Even a modest increase in credit card transaction volume can make a meaningful difference in your MCA offer.

Step 3: Organize Your Documentation

While MCAs require less paperwork than traditional loans, you'll still need certain documents readily available. Having these organized shows professionalism and speeds up the approval process:

• Valid government-issued ID (driver's license or passport)
• Business bank statements (typically 3-6 months)
• Credit card processing statements (3-6 months)
• Business license and liquor license (ensure both are current)
• Voided business check or bank letter
• Articles of incorporation or business formation documents

Keep digital copies organized in clearly labeled folders so you can submit them quickly when requested.

Step 4: Understand Your Numbers

MCA providers will ask about your average monthly revenue and credit card sales. Don't just guess, know these numbers accurately.

Calculate your average monthly gross revenue for the past 3-6 months. Then determine what percentage comes through credit card processing. If you're averaging $50,000 monthly with $35,000 in card sales, that's 70% card penetration, which is generally favorable for MCA approval.

Understanding these metrics also helps you determine how much funding you can realistically qualify for and whether the daily repayment amount will be manageable for your cash flow.

Step 5: Clean Up Your Online Presence

This might seem surprising, but many MCA providers do a quick online search of your business. Make sure your liquor store presents well online:

• Verify your Google Business Profile is accurate and current
• Ensure your website (if you have one) is functional
• Check that your business address and contact information are consistent across all platforms
• Address any negative reviews professionally

A strong online presence suggests a legitimate, well-managed business.

Step 6: Address Any Legal or Compliance Issues

The liquor industry is heavily regulated, and MCA providers know this. Ensure all your licenses are current and there are no pending violations or compliance issues.

If you've had any regulatory problems in the past, be prepared to explain what happened and what steps you've taken to resolve them. Transparency builds trust.

Step 7: Determine Your Actual Capital Needs

Before applying, get clear on exactly how much funding you need and how you'll use it. Common legitimate uses for liquor store MCAs include:

• Purchasing inventory for holiday seasons or special events
• Upgrading POS systems or security equipment
• Covering short-term cash flow gaps
• Funding renovations or expansions
• Managing unexpected expenses

Having a specific, sensible plan for the funds demonstrates business acumen and makes providers more comfortable extending credit.

Step 8: Research Multiple MCA Providers

Not all MCA companies are created equal. Factor rates, repayment terms, and daily holdback percentages can vary significantly. Don't settle for the first offer you receive.

Look for providers who:

• Are transparent about their terms and total repayment amounts
• Have positive reviews from other business owners
• Offer reasonable factor rates (typically 1.1 to 1.5)
• Provide clear explanations of the holdback percentage
• Have experience working with retail or liquor businesses

Getting multiple offers allows you to compare and choose the best fit for your situation.

Step 9: Prepare for the Application Interview

Some MCA providers conduct a brief phone interview as part of the process. Be ready to discuss:

• How long you've owned the business
• Your typical sales patterns and seasonality
• How you plan to use the funding
• Your repayment plan and cash flow projections
• Any challenges your business has faced and overcome

Practice explaining your business in clear, confident terms. This conversation is your chance to tell your story beyond the numbers.

Red Flags to Avoid

While preparing your application, steer clear of these common mistakes that can derail approval:

Applying with multiple providers simultaneously. This can trigger excessive inquiries and make you appear desperate.

Providing inconsistent information. Make sure all your documents and stated figures align.

Having outstanding tax liens or judgments. These can be automatic disqualifiers for many providers.

Showing declining sales trends. If your sales are dropping month over month, address this before applying or be prepared with a compelling explanation.

After Approval: Setting Yourself Up for Success

Once approved, the key to a successful MCA relationship is managing your cash flow carefully. Remember that a percentage of your daily credit card sales will be automatically deducted for repayment.

Calculate what your daily sales need to be to cover the holdback and still maintain healthy cash flow for operating expenses. Build in a buffer for slower days or unexpected costs.

Many liquor store owners find MCAs particularly useful for bridging gaps during slower months or funding inventory purchases before peak seasons when sales and card transactions increase dramatically.

Final Thoughts

Preparing your liquor store for an MCA application doesn't require months of planning, but taking these steps seriously can mean the difference between approval and rejection, or between favorable terms and costly ones.

The effort you invest in organizing your finances, understanding your numbers, and presenting your business professionally pays dividends not just in securing funding, but in developing a clearer picture of your business's financial health overall.

Remember, an MCA is a tool, a sometimes expensive one so use it strategically when the capital can genuinely help your business grow or navigate challenges. With proper preparation and responsible use, an MCA can provide the quick funding injection your liquor store needs to thrive.