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Merchant Cash Advance Consolidation

Consolidate Merchant Cash Advances

Merchant cash advances are a way for small businesses to secure capital through the sale of future business bank account deposits or credit card deposits for an upfront lump sum of cash (at a discount to the lender). This types of business financing is very useful for small and mid-sized businesses who need fast business financing without lots of documentation required. Another benefit of merchant cash advances are the fact that high credit scores aren’t often needed, nor are the basis for funding. The merchant cash advance funder will usually base financing on the company’s cash-flow over the past 3-12 months.

While businesses who use cash advance can expect fast funding, with little paperwork, there is a trade off. Since business cash advance lenders provide capital to 95% of applicants, they take a higher-risk in not being paid-back. Because of those risk, business cash advances have higher rates (in some instances, much higher rates) than other forms of financing, including SBA loans, bank loans and lines-of-credit, Mid prime loans and subprime business loans.

Another feature of merchant cash advance funding that is unique and helpful, is the fact a company can refinance multiple cash advance business loans at the same time. Its not uncommon to see some merchants with four, five or even six merchant cash advances at the same time, while even having an SBA loan and also a bank loan or line of credit. Since daily repayments are often required with a MCA, there can be real cash-flow strains on a daily basis. The daily remittances can then lead to the need for new cash advances to fill the gaps in cash-flow.

Solutions for Multiple Cash Advances?

Thankfully there are solutions for merchants, small businesses and mid-sized businesses with multiple cash advances. By consolidating all advances into a single facility (either daily, weekly or monthly repayments) a business is able to help free up cash-flow, increasing the ease of repayment and reduce the business debt service coverage ratios. These types of financing include:

  • Midprime Financing
  • Private Investment banks
  • Institutional Lending
  • Cash Advance Consolidation Specialists

Each of these lenders have different size and structures of their consolidation loans, and also have different credit and documentation requirements. Generally, the lenders that require more due diligence tend to offer the better rates and terms.

Rates Terms Funding
Term Loan 6-20% 1-5 years 7-10 days
Line of Credit 6-30% 1-3 years 3-10 days
Cash Advance 1.20 – 1.45 6-24 months 1-3 days

Asset Based Consolidation Loans

Asset based lenders are often able to consolidate multiple cash advances (between 2-9 advances) buy using the merchant or business owner’s commercial real estate or personal property they own as collateral for financing. Asset based lenders can offer 1st positions, 2nd positions and even third positions on the property.

  • Business credit score: 550+
  • Years in business: 6 years
  • Debt-service-coverage-ratio: 0.5
  • Tax Liens: Yes

Private Investment Banking

Private investment banks are able to offer small and mid-sized businesses with lots of leveraged debt (including business cash advances) with the ability to consolidate most or all of their debt into a single, more manageable facility. Private investment banks offer both term loans and lines-of-credit on a secured, and sometimes even unsecured basis. Key features of private investment lenders include:

  • Business credit score: Varies depending on assets (AR, inventory, equipment, CRE)
  • Years in business: 2 years
  • Debt-service-coverage-ratio: 0.5
  • Tax Liens: No

Private investment banks will generally look at both a company’s cash-flow, but also their assets. A private investment lender looking to consolidate debt (including cash advances) tend to like to secure the new facility with assets like:

  • Accounts Receivables
  • Inventory
  • Commercial real estate
  • Equipment and/or machinery

Cash Advance Consolidation Companies

Business cash advance consolidation companies are able to buyout all existing cash advances, and roll it into a single cash advance at a more manageable rate and term. These lenders offer repayments in daily, weekly and even monthly fashion (although daily remittances via ACH is most common). Some cash advance consolidation funders require the merchant to net 50% of the loan amount after the cash advances are paid-off. Other cash advance consolidation and refinance funders are willing to payoff the entire amount of cash advance debt without offering any new funds. Documents required are usually

  • Credit application
  • 6 months bank statements
  • List of existing cash advances
  • Voided check
  • Photo ID

Additional Position Cash Advance Funding

While it is never recommended, sometimes a business can find itself with a cash advance, and the need for immediate working capital. For those businesses the time associated with obtaining more traditional financing can become too cumbersome. Or, a company with multiple cash advance may have some disqualifying issue (like tax liens or low credit score) that will prohibit them from qualifying for a consolidation loan of cash advances. For those companies the only option available may be an additional cash advance in a 2nd, 3rd, 4th of 5th position. But those borrowers can expect to pay the highest rates of all cash advances (as high as a 1.50 factor rate over 5 months). To apply for this type of financing, the merchant will need to provide:

  • Credit application
  • 6 months bank statements
  • Voided check
  • Photo ID

Get Advances Consolidated

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GUD Capital is a nationally recognized leader in the financing industry for providing the best business lending solutions available to small and mid-sized businesses. We leverage our network of 4,000 competing commercial lenders to provide your business the largest selection of commercial financing options.

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