Can You Consolidate Multiple MCAs?
Yes, consolidating multiple MCAs into a single obligation is possible, but the method matters enormously. Done right, it reduces your payment burden and simplifies management. Done wrong, it increases total debt and accelerates the path to default.
Consolidation Through Settlement
The best approach. Settle each existing MCA for a reduced amount and replace the total obligation with a single manageable arrangement. If you owe $300,000 across three MCAs, an attorney may settle all three for $150,000 to $180,000, then structure a single payment plan. This reduces both total obligation and monthly payments.
Consolidation Through Reverse Consolidation
A new funder provides an advance large enough to pay off all existing MCAs, replacing them with a single daily payment. This simplifies payments but typically increases total cost because the new funder charges a factor rate on the entire consolidated amount including payoff balances that already include premiums. It is paying a premium on top of a premium.
Consolidation Through Traditional Refinancing
If your business qualifies, replacing all MCAs with a bank loan or SBA loan is optimal. The cost savings are dramatic, going from 60 to 200 percent effective APR to 6 to 15 percent. The challenge is qualifying while MCA debt and UCC liens exist.
Key Questions Before Consolidating
- Does consolidation reduce the total amount owed or increase it?
- Does the payment decrease enough to restore sustainable cash flow?
- Are UCC liens from original funders properly terminated?
- Are personal guarantees from original MCAs fully released?
- What happens if you default on the consolidated obligation?
The Right Approach
Work with an attorney to evaluate all options. They can negotiate settlements, ensure lien terminations and guarantee releases, and structure the most favorable terms. Do not pursue consolidation through another MCA funder without legal guidance, as this often worsens the situation.