MCA consolidation and reverse consolidation

How reverse consolidation works

A reverse consolidation does not pay off your advances. It covers them. Each week, scheduled deposits land in your account sized to your current payments, so every existing funder keeps getting paid on time. You pay back one smaller amount on a longer term, so your net outflow typically drops from the first week.

Round numbers, for illustration only. A business deposits $120,000 a month and carries three advances that pull a combined $9,000 a week, about a third of its deposits. A reverse consolidation deposits $9,000 a week for the 20 weeks those advances have left, $180,000 in total. At a 1.40 factor the payback is $252,000, collected at $4,500 a week. For those 20 weeks the business sends out $4,500 a week instead of $9,000. Once the old advances finish, it keeps paying $4,500 a week for about 36 more weeks.

The trade is plain. In that example the business pays $72,000 more in total and stays in a payment roughly 13 months instead of 5, in exchange for cutting its weekly outflow in half while it steadies. That is worth it when the size of the payment is what is breaking the business. It is not worth it if the business cannot carry the debt at all, and we will tell you if that is what your statements show.

Payoff consolidation: one advance instead of several

A payoff consolidation is one new, larger advance that pays off your existing balances at closing. You walk out with a single payment, usually on a longer term than the advances it replaced. Ask each current funder for a payoff letter first. Many contracts step the balance down for early payoff, and those discounts are what make a payoff consolidation pencil out.

The factor rate applies to the whole new advance, including the dollars that go to payoffs, so the total owed goes up even as the payment comes down. It works best with one or two positions, real payoff discounts, and a plan not to stack again afterward.

Which one fits your file

• Three or more positions, account touching zero: reverse consolidation. It is built for stacked files and needs no payoffs.
• One or two positions, payoff discounts on the table: payoff consolidation. One clean payment. Total cost still rises unless the payoff discounts are large.
• Just took a new advance: reverse consolidation. No waiting period after your most recent advance.
• Revenue dropped and the payments no longer match it: start with reconciliation under your current contracts. Our guide on how to get out of a merchant cash advance walks through it, then call us.

What we need to quote it

• The application. No hard credit pull to check your options.
• Your last three to four months of business bank statements, plus month to date.
• A current balance for each advance, and any payment reductions already in place.
• Page one of each advance contract, if you have it. It speeds up the quote.

Complete files move fastest. First offers typically land within one business day.

Ask these before you sign any consolidation

• What is the total payback across every position, in one number? Old advances plus the new one. Get it in writing before you sign.
• Does it pay off my advances or cover them? Payoff and reverse are different products with different costs.
• Is there a discount for paying it off early? Most deals carry one. Get the schedule before you sign.
• Is anyone asking me to stop paying? If so, that is settlement, not consolidation, and it puts every contract in default.
• Is there any fee before funding? There should not be. We charge nothing upfront.

Run the numbers yourself with our MCA repayment calculator, and read MCA stacking: costs and ways out for the full picture.

MCA consolidation questions