Can You Refinance an MCA?
Refinancing in the traditional sense means replacing an existing obligation with better terms. You can refinance an MCA, but options depend on your business’s financial condition and the type of refinancing.
Refinancing with Traditional Lending
The ideal scenario replaces the MCA with an SBA loan, bank term loan, or business line of credit at a fraction of the cost. A $100,000 MCA with a 1.35 factor rate costs $35,000. Refinancing into an SBA loan at 8 percent saves approximately $27,000. However, qualifying while an active MCA exists is difficult because the UCC lien blocks most lenders, daily payments reduce demonstrated cash flow, and existing MCA debt signals higher risk. You typically need to settle or pay off the MCA first.
Refinancing with Another MCA
Replacing one MCA with another, sometimes called renewal, is not true refinancing. The new advance includes a new factor rate applied to the entire amount including the old payoff balance. You are paying a premium on money already borrowed. This increases total cost and is functionally stacking.
When Refinancing Works
When your business has improved since the original MCA. Revenue is higher, credit is better, or you now qualify for options unavailable before. In this case, a lower-cost product genuinely reduces your cost of capital. If your situation has not improved, refinancing is unlikely to help.
The Better Alternative
If you cannot qualify for traditional refinancing, negotiating a settlement with the existing funder is typically more effective than taking a new MCA. A settlement reduces total owed. An MCA refinance increases it. Talk to an attorney about which path makes sense for your specific situation.