Can I Refinance a Merchant Cash Advance With an SBA Loan?
Sometimes. SBA lending rules allow refinancing certain business debts, and some owners have paid off advances this way, but SBA loans take longer and ask for more than an MCA, so it works best for established businesses with solid credit and tax returns.
Why do owners look at SBA refinancing?
An SBA loan usually has a longer term and lower cost than an advance, so replacing an MCA with one lowers the monthly burden. For a business carrying one or more advances, that can free up a lot of cash flow.
What do SBA programs look for?
- Several years in business, with tax returns showing the business can repay.
- Good personal credit for the owners.
- A solid reason for the loan and a clear use of funds.
- Collateral where available, though not always required.
- Documentation of the debts being refinanced.
The SBA publishes its program rules, and banks and other SBA participants add their own requirements. Refinancing existing debt has specific conditions, so ask the bank how they apply to an MCA.
When is the right time to try?
SBA loans often take weeks or months to close. If your advance is squeezing you now, the SBA route won't fix this week's cash flow. Some owners use a short consolidation first, then refinance with an SBA loan once their statements look healthier.
What gets in the way?
Multiple advances, recent returned payments and a UCC lien from a funder can complicate an SBA application. The bank will want the existing funders paid off at closing and their liens released. Keep your payoff letters and terminations handy.
What does Afterfirst do here?
We don't arrange SBA loans. We arrange the five services on our site: same-day advances, second and third position, consolidation, revenue-based financing and lines of credit. If an SBA loan fits you better, we'll say so, and we'll help you get payoff letters from your current funders.
How do you get your file SBA ready?
SBA applications ask for tax returns, financial statements, a debt schedule and personal financial information for each owner. Start gathering them early. Clean up the business bank account, avoid new advances while you're applying and make sure your books match your returns. A tidy file moves faster through any bank's process.
How does the payoff work at closing?
When an SBA loan pays off an advance, the bank usually sends the payoff directly to the funder at closing, based on a written payoff letter. Ask the funder for a letter with a good through date that covers the expected closing. Afterward, confirm the UCC termination is filed.
What if the bank says no?
A decline isn't the end. Ask the bank what would change its answer, whether that's more time in business, stronger credit or lower existing payments. Then build toward it.
How can Afterfirst help with this?
Call 877-FUND-654 and tell us about the advances you're carrying. If an SBA loan is a realistic path, we'll tell you. If you need relief sooner, we'll show you what a consolidation or a line of credit does for you in the meantime.
What else do owners ask about this?
- Can I get a bank loan after taking a merchant cash advance?
- How long does an MCA consolidation take?
- What happens to my MCA if my sales go up?
More short answers on this topic are on the after you're funded FAQ, and the MCA early payoff calculator runs the numbers for your own file.
Where do these facts come from?
Have a question we didn't answer?
Ask us on the call. 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.