Is an MCA Renewal Cheaper Than the First Advance?
Often, yes, when the first advance went well. A funder that has watched you pay cleanly has less uncertainty about your business, and that usually shows up as a lower factor rate, a larger amount or a longer term on the renewal.
Why does payment history lower the price?
Pricing an advance is mostly about risk. On a first advance, the funder is working from statements and a credit report. On a renewal, it has months of real payment data from your account. When that data is clean, the funder can afford to price more sharply, and it wants to keep a good merchant from going elsewhere.
Which terms can improve on a renewal?
- The factor rate, sometimes noticeably.
- The advance amount, especially if deposits grew.
- The estimated term, which lowers the payment.
- Fees, since some funders reduce underwriting fees for returning merchants.
Not every renewal improves all four. Funders pick where to give, so compare the full offer.
When does a renewal cost more?
If payments bounced, deposits dropped or you added other advances, the renewal offer can come back worse than the first. It also costs more in total if you renew very early, because you pay a new cost on a fresh purchased amount while a lot of the old balance is simply rolled over.
What's the early renewal trap?
Renewing when only a small share of the first advance is paid means much of the new money pays off the old balance. You take on a new full cost for a modest amount of fresh cash. That's the most common way renewals get expensive. Wait until you've paid down a good portion, unless you have a clear, urgent use for the money.
How do you compare a renewal with the first advance?
Line up the net new cash, the new total payback and the new payment. Then compare that with your current payment and the balance you'd otherwise finish. If the renewal gives you enough fresh money at a cost that makes sense for what you'll do with it, it's a good renewal.
Should you shop the renewal?
Your current funder knows you best, but it isn't the only option. Other funders sometimes compete hard for merchants with clean payment histories. We'll show you both.
When is loyalty worth it?
Staying with a funder who treated you well has value, especially if you've needed a reconciliation or some flexibility along the way. Weigh that alongside the price.
Why ask what changed?
When a renewal offer arrives, ask the funder which terms improved and why. The answer tells you what they value in your file, and it helps when you shop the renewal elsewhere.
How can Afterfirst help with this?
Call 877-FUND-654 and tell us where your current advance stands. We'll get your current funder's renewal terms and compare them with other funders in our network, so you know whether staying put is really the better deal.
What else do owners ask about this?
- What do I need to renew my merchant cash advance?
- Why do two funders price the same MCA so differently?
- Why is my MCA renewal check smaller than the approval amount?
More short answers on this topic are on the renewals and consolidation FAQ, and the MCA renewal calculator runs the numbers for your own file.
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.