Merchant cash advance consolidation
Merchant cash advance consolidation means one new advance pays your open advances off at closing, so one debit replaces several. It only helps if weekly cash improves and you know what the relief costs in total.
Business funding for owners with business bank deposits. Never personal or payday cash.
What does Afterfirst do with a consolidation file?
We turn your stack into one sheet of payoffs, then ask funders that consolidate to price against it. For the general explainer first, read is MCA consolidation worth it.
- You send one application. Add each current contract and your recent business bank statements. We email you first from info@afterfirstmca.com. A person calls only if you ask.
- We list every open position. Funder role, balance left, debit amount and debit frequency, taken from your contracts and statements, not from memory.
- You request payoff letters. Each current funder states, in writing and with a date, the amount that clears its advance.
- We shop the file only where consolidation fits. Funders see it only if their criteria include buyouts of open positions. We never publish a list of funders.
- Offers come back side by side. Each one names the payoff it covers for every position, the new payback, the debit and the fee withheld. Pick one, or walk away.
- Closing clears the old positions. Payoffs go to each current funder, lien releases get filed and the old debits stop. Details are below.
Which structure is the offer in front of you?
Six products get sold under the word consolidation. Only the first one pays several advances off and leaves you with a single position.
| Product | Old advances paid off? | Positions afterward | Weekly debit | Total you owe |
|---|---|---|---|---|
| Consolidation (buyout of several advances) | Yes, at closing, by payoff letter | One | One new debit, often lower | Often higher, because the new payback is priced on a larger amount |
| Refinance of one advance | Yes, one advance | Same count | Can drop | Can rise or fall |
| Renewal with your current funder | Its own balance only | Same count | Reset | Usually rises |
| Reverse consolidation | No, they keep running | All of them, plus one | Net debit drops for a while | Rises |
| Restructure with each funder | No, terms change | Same count | Can drop | Same balance on a longer schedule |
| Settlement | No, usually after a default | Disputed | Stops, as a default | Can fall, with lawsuits and credit risk |
A renewal or reverse consolidation has its own page: renewals and add-ons and reverse consolidation.
Does the offer pass both tests?
A consolidation should pass the weekly cash test, and you should see the total payback test in dollars before you sign. Here is how we lay them out for an owner with three open advances.
Sample figures. These are round numbers for checking the arithmetic by hand, not typical terms and not a quote. The funder sets the real terms.
The business deposits $80,000 a month. Advance one has $26,000 left at $1,625 a week, advance two has $15,000 left at $1,250 a week, and advance three has $9,000 left at $900 a week. Assume each payoff letter equals the balance left. The offer is a $56,000 purchase price with a total payback of $73,920, repaid at $1,680 a week over 44 weeks, with a $2,240 fee withheld.
| Line | Before: three advances | After: one consolidation |
|---|---|---|
| Open positions | 3 | 1 |
| Weekly debits | $1,625 + $1,250 + $900 = $3,775 | $73,920 ÷ 44 weeks = $1,680 |
| Share of $80,000 monthly deposits | $3,775 × 52 ÷ 12 = $16,358, about 20.4% | $1,680 × 52 ÷ 12 = $7,280, about 9.1% |
| Still to repay | $26,000 + $15,000 + $9,000 = $50,000 | $1,680 × 44 = $73,920 |
| Weeks until the last debit | 16, 12 and 10 | 44 |
| Cash to the business at closing | None | $56,000 − $2,240 fee − $50,000 payoffs = $3,760 |
Weekly cash test: passes
The debit falls from $3,775 to $1,680, which frees $2,095 a week. Debits drop from about a fifth of deposits to under a tenth.
Total payback test: costs $20,160
You would owe $73,920 instead of $50,000, and you receive $3,760 in cash. The relief costs $73,920 − $50,000 − $3,760 = $20,160. The old stack would also have ended in 16 weeks, while the new debit runs for 44. If the business can carry $3,775 a week for 16 weeks, finishing the advances is cheaper. If it can't, $20,160 is the price of the room. Spread over the new term, that's $20,160 ÷ 44 = about $458 a week, so ask a plain question: will the $2,095 a week you free up earn the business more than $458 a week? Payroll you keep, stock you can buy at a discount, or a slow month you survive can clear that bar. Spare cash that sits idle won't. Check your own numbers in the MCA cost checker, and compare factor rate with APR in factor rate vs APR.
What should a consolidation offer sheet show?
If any of these lines is missing, ask for it in writing before you sign.
- Each position it pays off, by name, with the payoff amount from that funder's letter.
- That payoffs go straight to each current funder at closing, as a condition of funding.
- The purchase price, factor rate, total payback, fee withheld and net cash to you.
- The new debit amount, its frequency and the number of debits.
- Whether the contract includes a confession of judgment or a personal guarantee. Ask an attorney or tax advisor what either means for you.
- Whether any current contract bars new funding before payoff. Ask an attorney or tax advisor before you sign anything that could trigger it.
What has to happen at closing?
Closing is done when every old debit has stopped and every old lien is released. Check four things.
- Payoff confirmation. Each current funder confirms in writing that its advance is paid in full.
- Lien release. A funder that filed a UCC-1 financing statement should file a termination. Under UCC section 9-513, once nothing is owed and you send an authenticated demand, the secured party has 20 days to file it or send it to you. Search your business name on your state's Secretary of State UCC search to confirm. See the UCC-1 glossary entry.
- ACH stops. Watch your bank account for the first debit days after closing. If an old debit still posts, contact that funder and your bank the same business day.
- One new debit. The only scheduled debit should be the new one, at the amount on your offer sheet.
When is consolidation the wrong move?
- The old advances end within a few weeks, as in the example above, and the business can carry the current debits until then.
- The offer doesn't name a payoff for every position, so some old debits would keep running next to the new one.
- Deposits are falling and a lower debit would only delay the same shortfall.
- You're already in default or a judgment has been entered. Ask an attorney or tax advisor before you choose any option.
- You qualify for a cheaper product, covered next.
Is there a cheaper way out than another advance?
Often, yes. A business line of credit or a bank term product priced on interest can pay off advances for less, if your credit, time in business and deposits qualify. SBA-backed financing through a participating bank follows its own refinance rules, set by the SBA in 13 CFR part 120 and its SOP 50 10. Ask the bank first whether your advances are eligible. We tell you when a cheaper product looks more likely to fit than another advance.
How is Afterfirst paid when you consolidate?
Broker incentives are a fair worry on any consolidation, because a bigger new advance can mean more commission. Here is exactly how our pay works.
Merchants pay Afterfirst MCA no application fee and no broker fee. Funding companies pay us a monthly membership (plans run from $249 to $1,299 a month), and the funder pays us a commission when a deal funds. What you owe on an advance is paid to the funder and is shown in your offer: the amount, the payback, the payment and the term. Membership level does not change the order or the terms of the offers shown to you. Higher plans can change when a funder sees a file.
Full detail: how we are paid.
What documents does a consolidation file need?
- The completed application at afterfirstmca.com/apply.
- Every current merchant cash advance contract.
- Recent business bank statements showing each debit.
- A dated payoff letter from each current funder.
- Photo ID for each owner, requested when you complete your file.
Afterfirst MCA is a broker, not a funder: we shop your file, line up each offer against your current payoffs, and run two tests with you.
Consolidation questions owners ask us
Can Afterfirst consolidate merchant cash advances I already have?
We can shop the file. A funder that agrees to consolidate pays your open advances off at closing from its own purchase price, and you then make one payment to that funder. Whether any funder will do it depends on your deposits, your open balances and your current contracts. We show you every offer that comes back, and you can say no to all of them.
Will a consolidation file affect my credit?
Sending us the file isn't a credit check. A funder that wants to price the buyout may ask to see your credit, and it can do that only after you sign its authorization. Ask each one whether it's a soft or hard inquiry before you sign. Full detail: does an MCA affect credit.
Does my current contract allow an early payoff?
It depends on your contract. Some agreements give a discount for early payoff and some charge the full remaining payback. Ask your current funder for a dated payoff letter: that figure, not the balance on your statement, is what a consolidation has to pay.
Is a reverse consolidation the same thing?
No. A reverse consolidation leaves your current advances open and sends you money on a schedule to cover their debits, so you end up with one more position, not one. It has its own page: reverse consolidation.
Does a broker earn more when I consolidate?
A larger buyout can carry a larger commission, which is why we show every offer, including any smaller or cheaper one, with its payback in dollars. The full pay terms are in how Afterfirst is paid above.
How do I get out of merchant cash advance debt if consolidation isn't offered?
Your options are to finish the current advances, ask each funder for a restructure, look for a cheaper product, or talk with a debt settlement firm. Settlement usually means a default first. Ask an attorney or tax advisor before you stop any payment. See getting out of MCA debt.
Sources: UCC section 9-513, Cornell LII; 13 CFR part 120, eCFR; membership plan prices from our funder plans page. The worked example is our own example with round numbers.
Bring your payoff letters
Send one application with each balance and debit, and we'll lay every offer next to both tests. We email you first from info@afterfirstmca.com. A person calls only if you ask. Applying costs you nothing, and Afterfirst MCA charges you no fee. Funders pay us a commission when a deal funds, and funding companies pay us a monthly membership. The price of an advance is set by the funder and is shown in your offer.