A merchant cash advance (MCA) has emerged as a popular way for small business owners to inject cash into their business operation. As an alternative lending program, the MCA provides small business owners with lump-sum financing in exchange for an agreed-upon percentage of future credit card and/or debit card sales.

If you’re a small business owner looking for quick and efficient financing without a hefty application process, the MCA can be your ticket to fast cash. An MCA is also beneficial in that it doesn’t require a high credit score to qualify. The MCA funder will instead require the company’s cash flow over the past 3-12 months to process the application.

Research shows that about 95% of businesses qualify for a merchant cash advance. Those are some of the best odds in the industry.

However, the easy lending process usually comes at a cost: higher fees. Since funders are assuming a higher risk of not being paid back, they typically charge higher interest rates on MCA loans. If you do go down the MCA route, expect to pay a lot more in fees than an SBA loan or traditional line of credit. To learn more about SBA loans, read: SBA Loans Aren’t For Every Startup.

Since MCA loans are widely available and relatively easy to obtain, many small business owners have racked up a lot of debt in the form of multiple cash advances. Although these multiple loans seemed like a good idea at the time, compound interest and regular repayments can put a significant strain on cash flow.

We have an entire article dedicated to merchant cash advances. To learn about MCAs and how they work, check out: What is a Merchant Cash Advance?

MCA Consolidation

Business running multiple cash advances may be looking to consolidate all their debts into one easy payment. Luckily, business owners have several MCA consolidation consolidation options available to them. By consolidating several cash advance loans under one umbrella, businesses can reduce costs ad ease their repayment schedule. This has the added benefits of freeing up cash and reducing the need to take out additional loans just to keep the business functioning.

There are several MCA consolidation loans available, including:

  • Asset-based consolidation loans: These loans allow businesses to consolidate multiple cash advances by using commercial real estate as collateral.
  • Cash advance consolidation loans: Some lenders will offer to buy out all existing cash advances and roll them into a single monthly payment.
  • Bank loans: Traditional financiers also offer consolidation services to small- and medium-sized businesses. Banks offer both term loans and lines of credit on a secured and unsecured basis.

While an MCA loan can be a very powerful tool for business, it can be just as harmful if not used properly. Instead of blindly shopping around for consolidation options, business owners should consider working with a professional to help them determine the ideal financing option available to them.

Red Door Capital works with business owners to consolidate outstanding MCA debt into one manageable payment. This can help you save thousands of dollars over the long term. Our merchant cash consolidation services allow business owners to:

  • Free up cash flow by lowering their total monthly debt payment
  • Remove the stress of daily or weekly payments
  • Receive working capital at rates they can afford

To learn more, read all about our cash management and merchant services.

The 50% Net Rule

Consolidating your cash advances isn’t always easy because of the 50% net rule. Many funders require the business to net 50% of the loan amount after the cash advances are paid. In other words, your existing cash flow would need to substantiate a high enough advance amount to pay off your current MCA loans while netting you 50% or more on the new one.

For example, if you already have $50,000 in MCAs, your cash flow must be enough to cover a $100,000 advance in order to pay off the existing $50,000 advance. This leaves you with a net of $50,000 (the net 50% rule).

For many businesses, this simply isn’t possible. If you find yourself in this position, don’t panic! Red Door Capital works with small business owners to provide a proactive approach to debt consolidation. We listen to you, understand your business and suggest a product that’s going to benefit you in the long run. We find ways to help you consolidate your MCA loans an make payments on time. Contact us today to schedule a consultation.

Other Financing Options

If cash advance loans aren’t on your business radar, there are several other financing options to choose from. One of the simplest and most flexible is the business line of credit.

A line of credit can make your life easier by allowing you to hire employees, increase inventory and expand your operations. As a flexible loan,  a line of credit doesn’t have set monthly payments and you don’t have to use the full amount, either. This allows you to grow your business while catching up on bills (such as MCA payments).

To learn more about business lines of credit, click here.

Red Door Capital offers comprehensive financing solutions to entrepreneurs and small business owners. Whether you’re just getting started or looking to expand your business, we have the solutions that are right for you. We’re tapped into local, regional and national markets, allowing us to connect you with multiple lenders in various industries.

Review the following page to explore how our financing solutions can help your business grow.


Gud Capital. Merchant Cash Advance Consolidation.

LVRG. Merchant Cash Advance “MCA Consolidation.”

Ed McKinley (June 24, 2015). “Coming to the Rescue: Consolidation Can Save Merchants.” DeBanked.

360 Financial Services. How Does a Merchant Cash Advance Work?