Why Lenders Say No to Money Services Businesses, and Who Says Yes

By MercFinancial · Published 2026-10-21

Lenders say no to money services businesses on policy: Bank Secrecy Act burden, bank de-risking, agent liability and, for some models, the SBA lending exclusion. What each reason means and the lender types that say yes.

Lenders say no to money services businesses because an MSB account carries Bank Secrecy Act obligations the lender has to supervise, because regulators have for years pushed banks away from the category, and because the business model, cash in and cash out at volume, is one most credit policies were never written for. The decline is a policy decision made before the file is read. A small group of lenders, each funding one asset or cash flow, says yes to the same check casher, transmitter or currency exchange file.

This guide walks through each reason an MSB is declined, where FinCEN registration and state licensing fit, why agent liability matters to a lender, what the SBA rule does and does not exclude, and then the lender types that fund money services businesses anyway and what each one needs to see.

An MSB is declined on policy, which means the decline is about the category and the file was never read. Pick the lender that reads it.

The compliance burden a lender takes on with an MSB

A money services business, whether a check casher, a money transmitter, a currency exchanger or a seller of prepaid access, must register with FinCEN and maintain a written Bank Secrecy Act anti-money-laundering program with a designated compliance officer, training, independent review and the reporting that goes with it. The business carries that burden itself. The lender's problem is that it inherits a share of it. A bank that holds the MSB's account has to perform enhanced due diligence, understand the MSB's customers and transaction patterns, and be ready to explain the relationship to its own examiner.

A non-bank lender inherits less, but still enough to matter. If the borrower's registration lapses or its program fails an examination, the borrower can lose its bank account, its agent authorization or its license, and with them the revenue that services the loan. Most lenders have no staff who can read an anti-money-laundering program, so the simplest policy is to decline the category. The ones that write MSBs have learned what to ask for and charge for the time.

De-risking: how banks left money services businesses

Over the past decade and more, banks facing enforcement actions over anti-money-laundering failures responded by closing accounts for whole categories of customers rather than reviewing each one. Money services businesses were near the top of the list. The practice has a name, de-risking, and FinCEN and the federal banking regulators have said more than once that banks should assess MSBs individually rather than exit the category wholesale. Policy at the branch has moved more slowly than the statements. Many banks still decline any MSB at account opening, and most of those that accept the account will not extend credit against it.

For a lender outside the bank, the consequence is practical. An MSB that has been bounced between banks shows statements with gaps and a pattern of account closures, which looks like instability even when the business is sound. A stable relationship with a bank that knowingly serves MSBs is therefore one of the strongest items in the file, and worth protecting above almost everything else. The check cashing business loans guide covers how to build that file.

Agent liability and the lender's view of a transmitter network

Most money transmission at the store level happens through agents. A licensed transmitter appoints a check casher, a grocery or a wireless store as its authorized delegate, and the licensee is responsible under state law for what the agent does with customer funds. The agent collects cash, the licensee owes the payout, and the gap between the two is settled on a schedule. A lender looking at either side of that relationship sees risk it did not create. For the licensee, an agent that fails to remit is a loss the licensee absorbs. For the agent, the transmission revenue depends on a contract the licensee can terminate.

Lenders that fund transmitters therefore ask for the agent agreements, the remittance schedule, the history of agent losses and the licensee's own bond and net worth standing with each state. Lenders that fund agents ask for the agency agreements and the share of revenue that comes from transmission versus the store's own services. Both sides are covered in the guide on funding a money transmitter or remittance business.

What the SBA rule excludes for MSBs, and what it does not

The SBA's eligibility rule, 13 CFR 120.110, excludes businesses primarily engaged in lending, naming banks, finance companies and factors, and treats pawn shops as a case-by-case question. It does not name check cashers, money transmitters, currency exchangers or ATM operators. A store whose revenue is check cashing fees, money orders and transmission commissions is not excluded by the rule. A store that also makes payday, title or installment loans, and earns most of its revenue that way, can be, because it is then primarily engaged in lending.

Eligibility under the rule is not the same as approval. SBA loans are made by lenders under their own credit policies, and most SBA lenders treat money services businesses as outside appetite regardless of the rule. The practical path is to find the few lenders whose policy allows the category, and to present a file where the compliance program is current and the lending activity, if any, is small, separated or absent. The SBA loan requirements checklist covers the standard conditions that still apply.

Who says yes to a money services business

The lenders that fund MSBs fund one asset or one cash flow, and each has its own file.

• Community banks with an MSB program. A minority of banks serve MSBs on purpose, with a compliance team built for it. They open the operating account, and some extend a cash-secured line for float. The price is enhanced due diligence and ongoing reporting.
• Commercial real estate lenders. Banks and private lenders fund the building the MSB occupies on the property's value and rent coverage. The tenant's industry matters less here than for any other product.
• Equipment lenders. Safes, cash recyclers, kiosks, check scanners and ATMs financed on the hardware. ATM operators get the cleanest reception, as ATM business financing explains.
• Specialty finance companies. A small group of lenders built around cash-intensive and regulated businesses, writing secured lines and term loans with covenants on compliance and bank account stability.
• Revenue-based and bank-statement lenders. Some non-bank working capital funders accept MSBs, sizing an advance on fee deposits and the owner's credit. Others list the category as restricted. The difference is in each funder's policy, not in the file.
• Vault-cash providers. For ATM operators specifically, bank-sourced cash placed in the machines under a lease, which removes the largest capital need from the operator's balance sheet.

Closed, as a rule: the large online lenders and major payment processors whose restricted lists name money services businesses and check cashing, and most bank term loans and unsecured lines.

Where MercFinancial fits

MercFinancial is a commercial funding brokerage in Houston, not a lender, and it does not claim to run an MSB program. It reads the file first: the FinCEN registration, the state licenses, the anti-money-laundering program, the agent agreements and the bank statements. From more than 160 wholesale and institutional funding sources it identifies the ones whose credit policy allows a money services business and the structure the file supports, places one file with all of them, and compares the offers on cost, term, collateral and covenants. When nothing fits, it says so and names what would change the answer. Availability depends on the funding source. The full set of guides is at check cashing and MSB business funding, and the business funding page describes the programs a file is read against.

Frequently Asked Questions

Why won't banks work with money services businesses?

Because an MSB account carries Bank Secrecy Act obligations the bank must supervise, including enhanced due diligence and the ability to explain the relationship to examiners. Many banks exited the category wholesale after enforcement actions, a practice called de-risking. FinCEN and the bank regulators have said banks should assess MSBs individually, but each bank sets its own policy, and most still decline.

Is a money services business eligible for an SBA loan?

A check casher, transmitter or currency exchanger is not excluded by the SBA rule, which bars businesses primarily engaged in lending. An MSB that earns most of its revenue from payday, title or installment loans can be excluded. Eligibility is not approval: most SBA lenders decline the category on their own policy, so the task is finding one that does not.

What do lenders check before funding an MSB?

FinCEN registration, confirmed in the public registrant search, the state license or agent authorization, the written anti-money-laundering program with its last independent review, the bank relationship and twelve months of statements, and the operating numbers: fee revenue, volume, losses and cash on hand. Only after that do they read the financials the way they would for any other business.

Which lenders actually fund money services businesses?

Community banks with a deliberate MSB program, commercial real estate lenders for the building, equipment lenders for safes, kiosks and ATMs, specialty finance companies built for cash-intensive businesses, some revenue-based and bank-statement funders, and vault-cash providers for ATM operators. Each funds one asset or cash flow, and availability depends on each funding source's policy.

Does being an agent for a money transmitter help or hurt a loan application?

Both. Agent commissions are a documented revenue line a lender can verify against the licensee's statements, which helps. The contract can be terminated by the licensee and the agent handles customer funds under the licensee's license, which the lender prices as risk. Bring the agency agreement, the remittance history and the share of revenue it represents.

MercFinancial is a commercial funding brokerage in Houston, Texas. MercFinancial is a broker, not a lender: every loan is made by a third-party funding source, every request is subject to that source's underwriting and credit approval, and loan amounts, advance rates, interest rates, terms, fees, collateral and guaranty requirements vary by funding source and borrower and are not guaranteed. Nothing here is a commitment to lend or an offer of credit, and financing is for business purposes only. Any example in this guide is hypothetical and illustrative; actual terms and outcomes vary. Money services businesses must register with FinCEN and comply with the Bank Secrecy Act; money transmitters are licensed state by state; financing availability depends on the funding source's policies. This guide is educational only and is not legal, tax, accounting or investment advice.