Can you refinance an MCA into a term loan?

Yes — you can refinance an MCA into a term loan, and the SBA 7(a) program explicitly allows loan proceeds to retire existing merchant cash advances when the refinance provides a clear benefit. A typical $200K MCA at a 1.45 factor rate carries an effective APR of 100–150%; refinancing into an SBA 7(a) at prime + 2.5–4.75% drops that to 9–13%, freeing $8,000–$13,000 per month in cash flow. Requirements: 600+ FICO (680+ for SBA), 6+ months since MCA origination, stable revenue, and a payoff letter from each existing MCA provider.

How MCA refinance works — the payoff letter process

An MCA is structured as a purchase of future receivables — not a loan — so it doesn't have an interest rate or a fixed payoff date in the legal sense. To refinance, you request a 'payoff letter' or 'buyout quote' from each MCA provider. The quote states the exact dollar amount needed to satisfy the advance in full as of a specific date. Your new lender wires that amount directly to the MCA provider at closing. The MCA's UCC-1 lien on your receivables is then released, giving the new lender a clean first-lien position.

Who qualifies for MCA refinance

Qualification for MCA refinance is more demanding than qualifying for the original MCA — because refinance lenders are underwriting long-term credit risk, not just revenue. Typical baseline: 6+ months since the MCA was originated (lenders want to see the business operating post-advance), 600+ owner FICO (some SBA lenders require 680+), revenue stability across the most recent 6 months of bank statements, and a clear debt schedule documenting the MCA balance and factor rate. Businesses with stacked MCAs — two or more advances outstanding simultaneously — face additional scrutiny and may need to pay down one advance before qualifying.

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SBA 7(a) MCA refinance — the cheapest path

The SBA 7(a) program is the primary government-backed vehicle for MCA refinance. SBA SOP 50-10-7 explicitly permits 7(a) proceeds to retire existing high-cost business debt — including MCAs — when the refinance provides a 'clear benefit' such as lower effective cost or extended maturity. Rates: prime + 2.25–4.75%; terms up to 10 years. Minimum requirements: 680+ FICO, 2+ years in business, $250K+ annual revenue, documented MCA payoff amount, and DSCR ≥ 1.25x post-refinance. Timeline: 45–90 days from application to funding.

Specialty lender MCA refinance — faster, higher rate

Specialty and alternative lenders offer MCA refinance products for businesses that can't yet qualify for SBA pricing. Requirements: 600+ FICO, 1+ year in business, verifiable monthly revenue. Rates typically 18–40% APR — significantly higher than SBA but dramatically lower than a 150% effective-APR MCA. Timeline: 3–10 business days. Use specialty lender refinance as a transitional step: exit the MCA stack, stabilize cash flow for 6–12 months, then refinance again into SBA pricing.

The cost difference — a concrete example

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Start. Your file routes to the funding partners best matched to your current MCA debt, FICO, and refinance urgency. ClearValue Lending is a funding platform, not a lender or financial advisor.