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Merchant Cash Advance Consolidation

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consolidate merchant cash advances

What is a Merchant Cash Advance Consolidation?

It’s not uncommon for small business owners to find themselves with multiple open forms of credit. You’ll take out a merchant cash advance to see your business through a slow period, but when you struggle with repayments you apply for another MCA to service the first one. This is called loan stacking.

Small business owners who find themselves borrowing against future credit card receivables, then borrowing again to service the first advance, often can feel trapped in this cycle. But there is a solution. 

Lenders offer merchant cash advance consolidations or refinancing to help you break the cycle of perpetual borrowing.

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Consolidate your MCA’s or get an additional one to ease the expense burden. Shield Funding offers competitive rates on all it’s funding programs. We have been assisting business owners for almost two decades with a five star rating.

How is a Merchant Cash Advance Consolidation Different from a Refinance?

There are two ways to pay off existing debt – refinancing and consolidation. 

With a refinance, it’s a one for one trade. The new loan pays off and replaces the old loan. The new loan could have better interest rates, terms, or a longer repayment term.

Consolidating loans takes multiple loans or forms of debt, such as merchant cash advances, credit cards, or term loans, and replaces them with one loan product. The small business owner trades multiple loan products for one loan.  

Why Consolidate Your Merchant Cash Advances?

Even if you pay upfront fees to consolidate your merchant cash advances, there are some strong financial reasons to take this step. In the long run, a merchant cash advance consolidation could greatly benefit your business.

Make fewer monthly payments.

Are you tired of remembering the days of the month payments on your existing merchant cash advances are withdrawn? When you consolidate your debt, this is no longer an issue.

Less risk of damaging your credit score.

Worried that you’ll forget to have sufficient funds in your account and incur an overdraft charge? Because you only have one payment to remember, there’s less risk that you’ll forget to have sufficient funds on hand. Failing to make a payment could result in overdraft charges, but also further damage to your credit report. Plus, merchant cash advance companies don’t report to credit bureaus, unlike banks and term loan lenders.

Lower your monthly payments.

When you consolidate multiple forms of debt, it can lower your monthly payment through a combination of a lower consolidated interest rate and by spreading out your repayment term.

More flexible payment plan.

With a merchant cash advance consolidation, you can work with your lender to create a payment plan that best suits your business. This could be daily, weekly, bi-weekly, or monthly repayment withdrawals. Banks rarely extend this flexibility.

Pros and Cons of a Merchant Cash Advance Consolidation


Consolidating debt can have a positive impact on your business. While its impact will vary depending on your specific situation, at least one of these pros to debt consolidation will apply.  

Easier to manage cash flow.

It’s hard to budget for multiple debt payments, particularly if you have unpredictable cash flow. When you consolidate your debt, it’s easier to predict and budget for repayments. Extending your repayment term lowers monthly payments, freeing up needed cash flow to run your business. 

Lower the blended interest rate.

The blended interest rate is the combined rate you’re paying on all your debt. It’s calculated off outstanding balances and rates, and you may be shocked to find that your blended rate is much higher than you thought. A debt consolidation could actually lower the overall rate you’re paying on your debt.

Build your credit score.

Paying off loan balances has a positive impact on your credit score. Successfully paying off your existing loans could help you qualify for better rates in the future.


There are pluses and minuses to any borrowing decision. Savvy borrowers should consider the downsides before applying to consolidate their existing debt.

You might not qualify.

If you fail to meet the lender’s qualifications, you could be wasting your time. Before applying, make sure that you know their lending requirements – such as minimum credit score and monthly revenues.

It might be difficult to get out of debt.

Refinancing or consolidating can start another cycle of debt, one where you’re rolling over existing debt to keep up with repayments. When borrowing, put together a clear repayment plan.

It could be even more expensive.

While your new interest rate could be lower than the combined interest rate on existing debt, the opposite is also true. With an extended repayment term and fees, in the long run refinancing or consolidating debt could be more expensive than continuing to make payments on existing loans.

How to Apply for a Merchant Cash Advance Consolidation

There are two ways to consolidate your debt – through a term loan or by taking out another merchant cash advance. Before applying, gather the following:

  • Proof of how long you’ve been in business
  • Copies of your driver’s license and any business licenses
  • Proof of minimum monthly revenues
  • Credit card processing statements
  • Any existing property leases
  • Proof of ownership
  • Voided check

Pulling together all your documentation before applying saves you time going back and forth with the lender. For loans over $100,000, they could request additional items. Once you have everything in hand, call or apply online.

Types of Merchant Cash Advance Consolidations

There are four good lending products which can help you consolidate debt. When comparing them to your situation, the best choice will become evident. 

1. Short Term Business Loans

With a short term business loan, you can pay off all your merchant cash advances and only make one payment. However, since the lender sends the funds to you directly it’s your responsibility to use the funds to pay off your other lenders.

Short-term business loans have a term of one to three years. Because a short-term loan has a longer repayment period than a merchant cash advance, your payments will be lower. Interest rates range from 9% to 45% and you can borrow between $15,000 to $750,000 to pay off your debt. 

2.  Reverse Loan

Existing debt could have prepayment penalties, or not allow for early payoffs or buyouts. Often, the existing lender wants to ensure they receive all their interest. In these situations, a reverse consolidation is your best option.

In a reverse consolidation, your new lender deposits the money to meet all of your monthly payments. Then they withdraw a separate amount – their repayment – which is lower than what they deposited. As you pay off debt, their deposits get smaller until the only debt remaining is the reverse consolidation. 

3. Another Merchant Cash Advance 

Another option is to take out one, larger merchant cash advance and use the funds to pay off your other, smaller merchant cash advances. This consolidates them into one payment. 

The typical repayment term on a new merchant cash advance will be two to twelve months, with interest rates of 24% to 49%. You can borrow from $8,000 to $250,000. 

4. Bad Credit Business Loan 

If the multiple merchant cash advances have hit your credit, you’ve probably seen your score drop. Banks and traditional lenders may no longer be willing to work with you. You’ll need to apply for a bad credit business loan to consolidate your merchant cash advances and stop your credit score’s download slide. 

With a bad credit business loan, you can still borrow between $5,000 to $1 million for a twelve to eighteen month period. You’ll need minimum monthly revenues of $8,000 and a credit score above 500. Rates range from 12% to 45%.

Because you represent more risk to the lender, they’ll take their repayment by automatic debit from your banking accounts five times a month. 

If your goal is to pay off multiple merchant cash advances and roll them into one, manageable payment, contact a loan officer today. They’ll look at your current situation and help you chart a path forward towards success by matching you with the best merchant cash advance consolidation.