Odds are that you don’t want to pay off all of your MCA debt with your business cash, especially if you are feeling the cash flow crunch associated with multiple daily or weekly automatic payments. A traditional consolidation with a lender would mean that a funder would pay off all your existing MCA debt and then you would just have 1 payment. In the alternative lending industry this just doesn’t happen (explained below), but there is a process to exit the cash advance cycle that works!
The reason why no funder would pay off every MCA balance and take you up for that type of deal is simple; too risky. Even if you have a great repayment history with the MCA funders, it doesn’t matter. Simply put, the money that would theoretically go to pay off the total MCA debt is not doing much good to help your business and the difference in payment size would be negligible. More paramount to that is the fact that you borrowed 2nd, 3rd, etc MCAs after your initial one. If you borrowed more than 1 MCA at a time in the past, it’s safe to say that a ‘would be’ consolidator would assume that you could do this again. This would put their money in jeopardy, especially if the other funders were calling you to borrow again!
A more likely solution is a Reverse Consolidation, where your current funders don’t even know that you are in a Reverse Consolidation. This process doesn’t consolidate your MCA debt all at once, but more so weans you off of the MCA debt with a much more digestible payment size.
Whilst a large consolidation is too risky for a funder, a Reverse Consolidation protects the consolidator, since all the funds aren’t released at once. It also helps the business owner, because a Reverse Consolidation requires less money for debt servicing, thereby increasing organic and available working capital in the business. To see how much cash flow you could save, please visit our savings calculator.