If your business has taken a cash-advance based on future sales, you may be wondering: can you refinance a merchant cash advance? The short answer is: yes — in certain situations you can, but there are many caveats. In this article we’ll walk you through exactly how merchant cash advances (MCAs) work, when refinancing makes sense, what your options are, and how to do it properly so you don’t trade one debt trap for another.
Many small businesses turn to a merchant cash advance when they need fast capital. These advances can look appealing because they promise quick funding and minimal upfront hurdles. But over time, the steep cost and rapid repayment schedule can squeeze cash flow. That’s where the idea of refinancing the advance becomes attractive.
In short: you may want to refinance a merchant cash advance to lower payments, extend the term, reduce cost, or simply regain more control over your business finances.
A merchant cash advance is not a traditional loan. It’s a transaction in which a business sells part of its future receivables (often credit-card or debit-card sales) in exchange for a lump sum.
Key characteristics:
The business gets immediate cash.
Repayment is often daily or weekly, via automatic debits or a fixed percentage of future sales.
There’s typically no fixed “interest rate” in the usual sense; instead you’ll see a factor rate (e.g., 1.2 × the advance amount) or aggressive terms.
Terms are shorter — often under 12 months.
While MCAs can solve immediate cash-flow problems, they come with significant risks:
High effective cost: Because daily or weekly deductions remove cash flow, the business may be strained.
Lack of amortization: Paying early doesn’t always reduce the total cost in the way that a normal loan would.
Reduced borrowing flexibility: Traditional lenders may view the business as higher risk if a large portion of revenue is already pledged to an MCA.
Debt-trap risk: Some businesses take multiple MCAs to cover prior ones — stacking debt.
When we say refinance a merchant cash advance, we mean replacing existing MCA debt with a new financing arrangement that typically has more favourable terms (longer term, lower payment, better structure) so you can improve cash flow and reduce cost.
Refinancing = Taking new financing to pay off the existing MCA. One debt replaced by another.
Consolidation = Combining multiple existing debts (MCAs, credit cards, term loans) into a single loan.
You may be able to secure monthly payments instead of daily.
Extend the term: for example from 6 months to 24-36 months.
Lower your interest/cost if you can borrow at a traditional rate.
Free up cash flow to invest back in your business.
The answer is: Yes — but with conditions.
How feasible refinancing is depends on several factors: your business health, available lenders, documentation, and the regulatory environment.
There have been recent changes and conflicting signals around whether financing by the Small Business Administration (SBA) can be used to refinance MCAs.
As of December 6 2024, the SBA issued Procedural Notice 5000-862692, which appeared to add “merchant cash advances, factoring agreements, and non-amortizing credit facilities” as eligible for refinancing under the 7(a) loan program.
However, more recent guidance states that the SBA has placed restrictions and that MCAs may not be eligible for refinancing in some cases.
So, while there is precedent that refinancing is possible, eligibility is not automatic and depends on complexity and the lender’s willingness.
Some private lenders advertise “loan products to refinance MCAs” with lower monthly payments and longer terms.
Specialist brokers point out that businesses can move from high-cost MCAs to bank term loans or lines of credit.
To successfully refinance a merchant cash advance you’ll typically need:
Strong enough cash flow/business performance — a lender must see you can repay the new financing.
Documentation in order — bank statements, sales data, profit & loss records.
Existing debt situation — Are you in default? Have you already missed payments? That may hurt eligibility.
Lender willingness — Many lenders refuse to refinance MCAs because of risk, but some specialised ones will.
Comparison of cost — The new loan must meaningfully improve your position (lower payment, lower cost) otherwise refinancing might just postpone the problem.
Here are circumstances where refinancing could make sense (and when it likely does not).
You have an MCA that dominates your cash flow (daily withdrawals, high factor rate) and you’re struggling to keep up.
You can qualify for a traditional term loan or line of credit with better interest/terms.
You want predictability in your repayments (switch from daily to monthly).
You want to improve your business’s ability to access traditional financing by removing the MCA burden.
You’ve evaluated the alternative and refinancing gives genuine cost savings.
The new loan offers worse total cost (longer term but ends up paying more interest).
You are still heavily dependent on fluctuating sales and don’t have stable cash flow.
You cannot obtain better terms and the new financing is just another high-cost advance in disguise.
You plan to keep taking MCAs after refinancing — you’re just rolling the problem forward.
You lack proper documentation or your business is in very poor shape.
If the “refinancing” is simply another MCA with similar daily/weekly payments — you may just extend the term while paying more overall.
If you are not given a full amortization schedule and total cost isn’t clearly spelled out.
If the lender expects you to keep the old advance and just add another on top.
Here’s a practical step-by-step plan to pursue refinancing of your merchant cash advance.
List all outstanding MCA(s) you hold: amounts, factor rates/terms, repayment structure.
Review your daily/weekly cash flows and see how much goes to servicing the advance.
Evaluate: do repayments hinder your operations (inventory, payroll, growth)?
Determine your business financial standing: years in business, credit score, profitability.
Decide what you need:
Lower monthly (or predictable) payments
Longer repayment period
Better total cost (lower factor rate/applied interest)
Consolidation of multiple debts (if relevant)
One monthly payment instead of multiple daily withdrawals
You’ll typically need:
Bank statements (last 6-12 months)
Credit card processing statements (if you have them)
Financial statements (P&L, Balance Sheet)
Information on the existing MCA(s): contract terms, payment schedule
Business tax returns (last 2-3 years, if available)
Look into:
Traditional term loans from banks or credit unions (if you qualify)
Online business loans / alternative lenders specializing in refinancing business debt
Specialist MCA refinancing companies/brokers (be cautious)
Lines of credit or equipment-based financing (if applicable)
Check the eligibility of SBA loan programmes (if you believe you meet criteria) — note the regulatory caveats.
Use a checklist:
What is the total repayment amount (principal + interest/fees) compared to your current MCA cost?
What is the monthly payment? Does it improve your cash-flow?
What is the term (24 months, 36 months, longer?)
Is the payment structure predictable (monthly) or still variable/percentage of sales?
Are there upfront fees or pre-payment penalties?
Does the new debt impose stricter covenants or require personal guarantees?
What happens to the old MCA — is it fully paid off and lien released?
Choose the best offer.
Use the funds (or arranged payoff) to pay off the existing MCA in full and get a “zero balance letter” from the MCA provider.
Ensure you terminate any control agreements, daily withdrawals, or liens.
Implement the new repayment schedule.
Monitor your cash-flow and business performance to make sure the refinancing delivers as expected.
Avoid repeating the same mistake: don’t go back into high-cost MCAs.
Maintain good records and credit habits.
Reassess your overall financing strategy (look at working capital, equipment financing, traditional term loans).
Consider consulting a financial adviser to avoid debt-stacking cycles.
Improved cash flow: Lower or monthly payments give you breathing room.
Potential cost savings: If you can secure a lower cost loan, you may reduce total debt burden.
Simplified debt structure: One payment instead of multiple daily/weekly ones.
Better borrowing profile: Reducing high-cost debt may improve your ability to access other financing.
Higher overall cost: Extending the term may reduce monthly payment but increase total interest paid.
Qualification risk: If your business isn’t strong, you may face high rates or be denied.
Hidden fees: Some refinancing offers hide fees or still leave you with a factor-rate structure.
Temptation to borrow again: Without addressing root causes (weak cash flow, over-reliance on MCAs), you may fall into the same trap.
Regulatory/eligibility uncertainty: Especially if relying on SBA programmes or other government-backed financing.
If you’re simply replacing an MCA with another MCA (i.e., similar daily deductions, high factor rate), you may just be “rolling” the debt, not truly improving your situation. Many experts caution against that.
The SBA’s December 6 2024 Procedural Notice seemed to allow refinancing of MCAs under 7(a).
However, an April 2025 article reports that the SBA placed restrictions “that merchant cash advances and factoring agreements are not eligible for refinancing for standard 7(a) loans.”
What this means: The regulatory environment is fluid. If you are seeking an SBA-backed option, work closely with a lender knowledgeable in SBA rules and ensure you’re up to date.
If your business has multiple MCAs, you may also face the option of consolidation (see definition above). Consolidation might make sense, but it’s still critical to seek a genuine improvement in terms, not simply more debt.
Your ability to refinance a merchant cash advance improves if your business has stable revenue, a good credit history, a manageable debt-to-income ratio, and clear records. If you are early-stage, loss-making, or heavily reliant on the advances themselves, refinancing may be more difficult or more expensive.
Know your current advance(s): factor rate, repayment schedule, daily/weekly impact.
Analyze your cash flow: can you support a new repayment schedule?
Set clear goals: what do you want to achieve with refinancing?
Collect required documents: bank & card statements, financials, business history.
Research lenders: evaluate offers, compare total cost, terms, structure.
Ensure old debt is paid and terminated properly (liens removed, daily withdrawals stopped).
Monitor your business post-closing and avoid returning to high‐cost advances.
Paying off means you settle the debt and stop the advance. Refinancing means you replace it with a new debt under different terms. If the new terms are worse or similar, you may not achieve any real benefit.
Technically yes, but this is rarely recommended because you may simply extend the term and increase the debt burden. Some experts call this a “debt trap”.
If you refinance properly and make timely payments on the new loan, you may improve your business’s credit profile over time. On the other hand, failing to manage the new debt could harm your credit and business.
Savings vary widely — you could reduce your daily payments and improve cash flow, but you need to compare total cost (interest + fees) of the old vs. new debt. Some lenders claim reductions in monthly payment by 50 %-90 %.
It depends. Many banks avoid businesses with MCAs because of the risk. But if your business has strong metrics, you may qualify for a term loan or line of credit that can be used to repay the MCA.
Let’s say a business took an MCA of $150,000 with a factor rate of 1.3. That means they owe $195,000 (150k × 1.3). Repayments are daily withdrawals, equal to a fixed amount which hits the cash flow hard.
The business negotiates a term loan of $195,000 at say 10 % APR, amortized over 36 months with monthly payment around $6,100. The business now makes one monthly payment instead of daily withdrawals, freeing up cash for operations. Over 3 years they’ll pay ~ $219,600 total (vs. unknown but high cost of the original MCA). If they can negotiate better terms, the savings may be more significant.
Key point: the business must confirm the new terms are truly better and document the transition carefully.
Yes — you can refinance a merchant cash advance, but it’s not automatic and you must tread carefully. The key is ensuring you replace a high-cost, cash-flow-straining debt with a better structured, lower cost financing. Refinancing only makes sense if:
Your business has sufficient cash flow and documentation.
The new financing provides real benefit (lower payments, manageable term, lower cost).
You fully pay off the old advance and cease its daily/weekly drains.
You avoid jumping back into another high-cost advance.
Refinancing can be a smart move to regain control of your business finances, improve cash-flow, and avoid the debt-stacking trap of multiple MCAs. But it requires due diligence, comparison, and discipline.
Call-to-Action (CTA):
Ready to explore refinancing your merchant cash advance? Start by gathering your existing MCA document(s) and recent bank statements. Then schedule a free consultation with an experienced business debt advisor or lender who understands MCA debt. Don’t wait until your cash flow is perilously low — the sooner you act, the more options you’ll have. Unlock a cleaner, more sustainable financing path today.