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Undoubtedly, a strong, useful financial tool for a business is MCA loans because they have a range of uses, including immediate relief from cash flow issues. But, if you have more than one MCA loan, it is complicated as each of them comes with different repayment schedules and rates. You tend to miss out on the repayment schedule and become a defaulter. 

If you wish to streamline your finances and get rid of your multiple MCA loans, the MCA consolidation loan is for you. This is the only viable solution for you or else, you will stay entangled in your MCAs and poor financing for your entire life. 

With MCA consolidation loans, you can manage your debts with varying factor rates and payment schedules. It’s because consolidation rolls up multiple MCAs into one loan or advance. It simplifies the dues into a single automatic debit, making it easier to remember. The best thing is that you will meet your deadlines easily and not become a defaulter. 

 

How do MCA consolidation loans work?

In MCA consolidation loans, the lending agency buys out all your existing MCAs, providing a lump sum cash advance in exchange. After consolidation, you will have to pay a set of costs. 

The MCA consolidation loan process is relatively simple. Before consolidation, the lender will ask you to submit several documents and share other information about your business financials. Next, the MCA expert will inspect and review your data to determine if you can afford to pay a merchant in cash advance. 

There is no fixed percentage or standard cash advance consolidation amount that you would receive. It depends on your agreement with the lender. Just keep in mind that every MCA provider has different criteria, meaning you cannot expect one lender to provide a high amount like another can offer. You should agree only if you can afford the most suitable loan. 

Royale Capital understands the financial hardships that the company faces because of MCA stacking. So, we can help you put your finances in order easily and conveniently. 

 

Is it possible to consolidate all the loans?

It is possible to consolidate all MCAs but not recommended in every situation. It’s because some MCA loans have penalties if you pay them earlier than anticipated. The lenders don’t prefer consolidation because it prevents them from receiving all of the interest they would have gotten if you continued to pay on a longer-term schedule. 

Before consolidating all your MCAs, you should check this repayment clause. If there is any such clause in any of your MCAs, you should go for an MCA reverse consolidation loan. It’s a better alternative to MCA consolidation. 

 

Difference between MCA consolidation loans and MCA refinancing 

There is a lot of confusion between MCA consolidation loans and MCA refinancing as both solve the problem of MCA stacking in the business. Many people prefer refinancing over consolidation. 

The difference between these two financing options is very simple to understand. The MCA consolidation loans supplement your working complement to fulfill your financial needs such as payroll, inventory, and other unexpected expenses. 

On the other hand, MCA refinancing means shifting the debt from one loan to another with better interest rates and fees. But, the thing is that refinancing doesn’t involve multiple MCA loans. With this, you can refinance only a single loan. Here, you replace the old loan with a new loan that has better terms overall. 

This is why an MCA consolidation loan is better than MCA refinancing. 

 

What are the options for MCA consolidation loans?

 

Another MCA

If you think MCA is working for your business, you should consolidate your existing loans into a larger loan of the same type. Consolidating existing MCAs into a new, single MCA is an easy option because you already know how they function. Most importantly, a new MCA requires the least amount of change to your current financial strategies. Make sure the requirements of the new MCA are better and affordable for you. 

 

Traditional business loan 

Moving from the MCA framework is also a good choice. You should choose an alternative format for loan consolidation. A common option is a standard/traditional business loan. With this loan, your business will receive a lump sum of money to repay your MCAs. But, this doesn’t mean you will be debt-free. You will have to provide repayments on the agreed schedule, which is the same or less frequently than an MCA loan. 

 

Reverse consolidation loan 

If MCAs have stipulations that they cannot be paid ahead of schedule, you can still consolidate them into a single loan with the reverse consolidation loan approach. In this loan process, the loan is transferred to a reverse consolidation lender in their current format who pays the amount according to the original contract. Later, you will have to pay the lender based on the terms agreed between you and the reverse consolidation lender. 

 

What should you consider before saying “Yes” to MCA consolidation loans?

First and most important, you should consider the new interest rate. It should be less than what you are paying currently. Also, the consolidation loan should have lesser fees than your existing debts. 

Next, you should consider the repayment period of the consolidation loan. You shouldn’t sign for the loan if the terms are less favorable than managing several MCAs at once. For example, if you choose a loan with a shorter repayment period, it will result in more expensive monthly repayments. And if you don’t pay the amount, your business finances and future will be in trouble.

Last, you should discuss every consolidation option thoroughly with your lender before agreeing to MCA consolidation loans. You should know the pros and cons of the consolidation loan options and weigh their suitability with your business requirements. Just keep in mind that it’s an important decision that can impact your cash flow and even your personal finances. 

If you are still doubtful, you should talk to Royale Capital experts. We will help you decide on the right loan product that will meet your needs.