What Is a Minimum Balance Flag?
A minimum balance flag refers to the automated detection of low-balance events in a bank account. In MCA and small business lending, many funders set a minimum daily or monthly balance requirement as part of their eligibility rules.
When an account falls below that threshold repeatedly, the minimum balance flag is triggered.
This flag typically appears during the scrubbing stage, when balances are extracted and evaluated. Operators use it to quickly filter out applicants that do not meet baseline financial stability requirements.
How Does a Minimum Balance Flag Work?
Minimum balance flagging works by comparing daily balances against a predefined threshold.
- Balance parsing: Daily balances are extracted from bank statements.
- Threshold check: Each balance is compared to the funder’s minimum requirement.
- Flag trigger: Dips below the threshold are logged and counted.
- Outcome: If the number of breaches exceeds the funder rules, the deal is marked as out of appetite.
Heron automates minimum balance flagging as part of its scrubbing process.
- Automated parsing: Bank statements are ingested and balances extracted line by line.
- Threshold detection: Heron applies funder-defined minimums such as “$1,000 daily balance.”
- Flag generation: Repeated dips below the threshold are flagged automatically.
- Structured output: The number of breaches is written into the CRM along with a pass/fail indicator.
- Next action: Submissions with too many low-balance days are routed to exception queues or declined.
This makes sure no applicant bypasses the rules and that underwriters see balance risks immediately.
Why Is the Minimum Balance Flag Important?
For brokers and funders, minimum balance flags are important because they protect against funding businesses that cannot maintain basic liquidity. Without this check, deals that look good on revenue may still default due to cash shortages.
Automating the flag reduces turnaround time and keeps eligibility checks consistent. With Heron, funders can enforce balance rules across thousands of submissions without extra manual review.
Common Use Cases
Minimum balance flagging is applied in underwriting and policy checks.
- Screening out applicants who fall below required daily balance thresholds.
- Counting how many low-balance days occur in a statement period.
- Feeding results into appetite screening rules.
- Writing flag results into CRM fields for underwriter visibility.
- Escalating borderline applicants to exception review for manual judgment.
FAQs About Minimum Balance Flag
How does Heron automate minimum balance flagging?
Heron parses daily balances from bank statements, applies funder-defined thresholds, and flags low-balance events automatically. Results are logged in the CRM.
Why are minimum balance flags important for risk screening?
They show whether a business can sustain the liquidity needed to repay. Frequent dips below the threshold suggest instability and higher default risk.
What outputs should teams expect from minimum balance flagging?
Teams receive counts of low-balance days, pass/fail indicators, and structured CRM fields that underwriters can use directly in eligibility checks.