Learn to Consolidate Your MCA Debt

Matthew Elling
Founder & CEO of Line of Credit Depot
December 10, 2022

When we talk about Consolidating Merchant Cash Advance (MCA) debt you have three options. Our company has dealt with every type of business throughout the years, each with different amounts and postions of MCA debt. Although each position is uniquely different, one trait remains the same; all business owners want to be MCA debt free! 

Now lets look at the options that you have based on the porspect of approval and program quality, all of which don’t include debt restructuring (defaulting on the MCA funder). 

The Least Likely Option 

Why is it not possible for one single MCA company to buy out of all of your current MCA debt? Now if this was a possibility the funder could pay off all of your MCA debt, but the likelihood of you using those proceeds for your business is extremely unlikely. And since you took out other positions in the past you would be wrote off as a risky investment because you could get more MCAs after a refinance. Then this would put the MCA refincace funder in jeopardy. On top of this once MCAs are paid off these funders would then try to give you more money. All of these reasons combined are why you did not see this option being offered in the alternative lending space. 

It is possible to find a funder that would pay off existing MCA debt but proper house keeping rules is that you would have to net more than half of the total new loan size, after paying off all other MCAs. For example if you were to be approved for $100,000 and your MCA debt exceeded $50,000 then the deal would not be approved. 

Apply for a Business Line of Credit at rates as low as 8.5%. How much are you looking for?

The Most Likely Option

We call the program that is designed to extend your payments for all your current MCAs - A Reverse Consolidation Program. By lengthening the term and by capitalizing the business to pay of fixed amounts of payments your business could see cash flow savings of up to 50%. If your business had multiple MCAs with different daily payments, a Reverse Consolidation funder would deposit funds in your bank account for the total amount of your MCA payments that week. As a result of this you would be obliged to pay a smaller amount for these disbursements, the payment size is about 30% to 50% less. This tactic frees up that much needed cash flow for the business. As the weeks go on the MCA debt gradually falls off as the deposit weekly lowers, until all the MCA’s are paid off. Then after that there would be a small payment to complete the Reverse Consolidation.

The Best Option

One option to paying off MCA debt is a business revolving line of credit. Despite the fact that this program is reserved for qualified near prime borrowers, most line of credit applicants have pre existing MCAs. With a line of credit having a low interest rates of between 8% to 4.5% annually, using the funds from a line of credit is an excellent way to save cash flow to MCA short term payments. To find out more about requirements for a Line of Credit in your State information can be found out here : LineofCreditDepot.com

Before you apply, check to see if you qualify.

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