Renewal: Meaning in a Merchant Cash Advance
A renewal is a new merchant cash advance from your current funder, usually offered once you've paid down part of the existing one. The new advance pays off the remaining balance and gives you fresh cash on top.
What does renewal mean?
After you've paid a good share of your first advance, the funder offers to renew. You sign a new contract, the funder closes out the old balance and the difference arrives as net new cash. Your old payment is replaced by a new one based on the new purchased amount.
Why does renewal matter to your business?
Renewals can be cheaper than first advances, because the funder has seen you pay. They can also be the most expensive habit in this industry if you renew too early and too often, paying new costs on money that mostly just rolls over. Wait until you've paid down a meaningful portion, and always compare the net new cash with the new total.
Should you shop a renewal?
Your current funder isn't the only option. Other funders sometimes compete for merchants with clean payment histories. Compare before you sign.
How do you handle renewal pressure?
Some funders call often once you're eligible, sometimes with urgency. You're never obligated to renew. A renewal should solve a real need, and if you don't have one, finishing the current advance and keeping the cash flow it frees up is often the better move.
Which renewal terms matter?
Read the new contract fully, even with the same funder. Terms change between advances.
Where will you see it?
In renewal offers from your funder, often by phone or email once you pass a paydown threshold, and in the new contract.
Which terms are related to renewal?
The full list is in the glossary. Owners ask about this in Is an MCA renewal cheaper than the first advance?.
A term on your offer you don't recognize?
Send us the line and we'll tell you what it means. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.