Yes — MCA refinance into a term loan is one of the most common distress-financing moves. The SBA 7(a) program explicitly allows proceeds to retire existing MCAs when the refinance provides a clear benefit. Moving from a typical MCA effective APR of 60–150% to an SBA or term loan at 9–25% can save $2,000–$10,000 per month on a $200K balance.
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.
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.
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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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 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.
Assume a $200,000 MCA at a 1.45 factor rate with 22% daily holdback on $60,000/month revenue. Daily payment ≈ $440; total repayment ≈ $290,000; effective APR ≈ 120%. Refinanced into a 5-year SBA 7(a) term loan at 10.5% APR: monthly payment ≈ $4,300; total repayment ≈ $258,000 over 5 years. Monthly cash-flow improvement: $440/day ($13,200/month) MCA holdback vs. $4,300/month term payment — a $8,900/month difference in available cash.
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