Merchant Cash Advance Reverse Consolidation: Combining Multiple MCAs into One
Hey there! If you’re a small business owner like me, you know how tough it can be to get funding. Banks are so stingy and take forever to approve a loan. That’s why merchant cash advances (MCAs) are so popular – they get you money fast without a lot of hassle.
But MCAs come with their own set of problems. Those daily or weekly payments can really add up. Before you know it, you’ve taken out multiple MCAs just to keep up with the payments on the ones you already have. It’s an endless cycle that keeps you stuck in debt!
-So what’s the solution? Merchant cash advance reverse consolidation! This strategy lets you combine all your existing MCAs into one new agreement. Here’s how it works and why it could be a real lifesaver for your business:
What is Merchant Cash Advance Reverse Consolidation?
With reverse consolidation, a lender pays off all your current MCA balances in full. This gets rid of those daily/weekly payments draining your bank account. Instead, you make one monthly payment to the reverse consolidation lender.
By stretching out the repayment period, your monthly cost goes down. This improves cash flow so you can better cover operating expenses. Let’s look at an example:
- You have 3 MCAs totaling $100,000
- You’re paying $7,500 per month combined on these
- A reverse consolidation loan for $100,000 may have a payment around $2,500 monthly
See how it reduces the burden? The longer term means lower payments so you have more working capital available.
-Benefits of Merchant Cash Advance Reverse Consolidation
Here are some of the key benefits this strategy offers:
- Lower monthly payments – More affordable payments improve cash flow
- Fixed interest rate – MCAs charge very high rates. A consolidation loan offers lower, fixed rates.
- Single payment – One monthly payment is easier to manage than multiple daily/weekly debits
- Improved credit – MCAs don’t help your credit but a consolidation loan can
- Access to capital – Freeing up future receivables lets you access more funding if needed
- Better terms – MCAs have high rates and fees. Consolidation offers way better terms.
For businesses drowning in MCA debt, reverse consolidation brings relief. It makes the debt more sustainable so you can get back on track.
Qualifying for Merchant Cash Advance Reverse Consolidation
To qualify for reverse MCA consolidation, you’ll need:
- 1+ years in business
- $10,000+ in monthly credit card sales
- $50,000+ in total MCA balances
- 600+ personal credit score
The lender reviews your credit card statements to verify consistent revenue and repayment ability. If your business is too new or doesn’t have enough sales, you probably won’t get approved.
How to Apply for MCA Reverse Consolidation
Here are the steps to get the ball rolling:
-- Contact lenders – Reach out to a few reverse consolidation lenders for quotes.
- Send documents – Provide financial records so they can analyze your eligibility.
- Review offers – Compare terms, rates, fees, and other details.
- Accept offer – Choose the best offer and complete the application.
- Lender pays off MCAs – The lender sends checks to pay your providers in full.
- Make new payments – You begin making the single monthly payment to the lender.
The process usually takes 2-4 weeks. Pick an experienced lender who can move quickly to get you relief ASAP.
Potential Downsides to Reverse Consolidation
While reverse consolidation can throw a lifeline to struggling businesses, there are some drawbacks to note:
- Closing costs – You may have to pay 1-5% of the loan amount in origination fees.
- Prepayment penalties – Some lenders charge you if you pay off early.
- Collateral required – The lender may require a personal guarantee or lien.
- Damaged relationships – Consolidation ends your relationships with MCA providers.
- Variable rates – Your rate could go up, increasing payments.
- Longer term – While good for cash flow, a longer repayment term means more interest paid.
Be sure to read the fine print so you understand the terms and risks involved.
-Alternatives to MCA Reverse Consolidation
If consolidation won’t work, here are some other options:
- Take out one larger MCA to pay off multiple smaller ones
- Apply for a bad credit business loan to consolidate and improve your credit
- Seek professional debt relief help to negotiate settlements on your MCAs
- Make operational changes to increase sales and cash flow organically
The key is finding a solution that reduces or eliminates your MCA debt burden so your business can thrive.
Reverse consolidation can be a real lifesaver, but it also comes with risks. Make sure you understand the pros and cons before moving forward. With the right strategy, you can break the cycle of MCA debt and get your business back on track!
Let me know if you have any other questions!