MCA Consolidation is a Need For Small Business Owners
Most people don’t think about how to consolidate MCA debt before they find themselves over extended with MCA loans. This is because merchant cash advances are designed to give small businesses working funds secured by the sale of future bank and credit card deposits. For businesses who need working capital quickly without a lot of hoops to jump through, this type of loan is tempting.
An MCA isn’t always the right solution, though. Yes, they are an easy loan to get from a credit standpoint, but since the loan approval is largely based on the past 3-12 months of earnings, having a lower than average credit score isn’t typically a factor.
Consolidate MCA loans
Since these are a higher than average risk loan from a lenders perspective and have a high approval rate, they most often have a higher than average payback. In fact, much higher in most cases. Compared to SBA loans, business credit lines, business credit cards and mid and subprime loans, your payback will be higher.
When business cash flow slows down is commonly when a business begins to feel the strain of the daily merchant cash advance payments. Many time this leads a business owner to secure another MCA. Sometimes this cycle continues until a business owners finds themselves paying back 4, 5 6 or even more MCA loans. This cycle can’t continue obviously, and at some point getting another cash advance isn’t an option. Looking into bankruptcy or seeking bankruptcy alternatives such as business debt relief isn’t usually far behind this realization.
How to Consolidate MCA Loans With Multiple Lenders
An asset based consolidation loan is an option if you have enough commercial or personal real estate or property to properly secure this type of loan. An asset based loan will allow you to consolidate as many MCAs as you have sufficient collateral to cover.
You also have options such as an MCA and business debt restructuring company
such as us. Through our restructuring program, we are able to restructure your agreement with your lenders, giving you a more manageable payment and payback schedule. Consolidating your payments into one payment is also part of the restructuring process.
There are also the options of mid-prime funding, private investment banks, and companies that specialize in cash advance consolidations.
Each option will have different requirements for getting approved. It always a good idea to look into the different options in more detail and see which is most fitting for you. You can accomplish this largely through online research and even more so by calling some of the companies or institutions you come across and that look reputable during your research.
Benefits of Consolidating Merchant Cash Advances
Besides the obvious benefit of only having one payment, what are some other benefits of consolidating cash advance loans?
Many times you can get a more attractive payment schedule. Rather than a daily payment, you could set it up on a monthly payment with the right MCA consolidation.
You will, most likely, get a lower interest rate. Longer payback term. This is great when combined with a lower interest rate.
When you combine the convience of one payment with a longer term and lower interest rate, you can really see the advantage of when you consolidate MCA debt.
Business Qualifications for an MCA Consolidation Loan
The main three things a lender will look at is your current revenue, credit score and how over extended you are with merchant loans.
If your credit score is high enough to qualify and your business cash flow is acceptable, they will begin finding a suitable term that works for both you and them.
If you do not meet the consolidation lenders requirements, then seeking other alternatives such as an MCA debt relief program is a good course of action. The worst possible thing you can do is nothing. Hoping your over extension will get better by itself will only make it worse.
How Does a Reverse Consolidation for MCA Loans Work?
Your MCA payments are made from funds provided by your reverse MCA consolidation funder that they deposited directly into your business bank account. Now, rather than making daily payments, you are making weekly payments. Typically, reverse funding companies give you an extended term as part of their service. This type of help is different from an MCA consolidation loan, but does have the ability to free up cash flow with savings usually ranging between 30%-50%.