Can you refinance an MCA into a term loan?

Yes — you can refinance an MCA into a term loan. A typical $200K MCA at a 1.45 factor rate carries an effective APR of 100–150%; refinancing into a private or specialty-lender term loan at 22–35% APR frees up thousands per month in cash flow. Requirements: 600+ FICO, 6+ months since MCA origination, stable revenue, and a payoff letter from each existing MCA provider. Note: SBA 7(a) is not an eligible path — as of SOP 50 10 8 (effective June 2025), the SBA explicitly excludes MCAs and factoring agreements from 7(a) refinance eligibility.

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 (stronger files access the lower end of the 22–35% pricing band), 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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Why SBA 7(a) is no longer an MCA refinance path

SBA 7(a) used to be pitched as the cheapest MCA payoff route. That changed with SOP 50 10 8, effective June 1, 2025: the SBA now explicitly excludes merchant cash advances and factoring agreements from 7(a) refinance eligibility, with no exceptions or grandfathering for applications submitted after May 31, 2025. Whatever your FICO or revenue profile, an SBA loan can't be used to pay off an existing MCA today.

Private and specialty lender MCA refinance — the realistic path

With SBA off the table, private and specialty lenders are the primary route to refinance an MCA into a term loan. Requirements: 600+ FICO, 6+ months in business, verifiable monthly revenue, and a documented MCA payoff amount. Rates typically run 22–35% APR — still dramatically lower than a 60–150% effective-APR MCA, since a term loan's rate is disclosed and fixed rather than compounding through daily debits on a factor-rate contract. Timeline: 3–10 business days for most specialty lenders, longer for bank-adjacent term-loan products that price at the lower end of the range.

The cost difference — a concrete example

Apply at ClearValue Lending

Start at small business financing to compare products, or apply directly at Find my match — 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.