Merchant cash advances can strangle small businesses, especially new or struggling small businesses. These cash advances, so valuable to emerging businesses, can before too long saddle those businesses with unwieldy debt, leading to a cycle of borrowing and repaying.
What is a Merchant Cash Advance?
Merchant cash advances, or MCAs, are funds paid to a business in exchange for future earnings or as a short-term loan with low monthly payments. According to the Federal Reserve, 7% of a sampling of small business owners apply for MCAs each year. Merchant cash advances can be very helpful for new or small businesses as they build their enterprise: they can be used to fund new projects, pay staff, accumulate necessary inventory and equipment, and in many other ways. Frequently, however, small business owners find themselves in a frustrating cycle of using new MCAs to keep up with the remittance on extent MCAs. There is an alternative to this unsustainable cycle of MCA debt: MCA reverse consolidation loans.
What is a Reverse Consolidation?
A reverse consolidation is a loan that consolidates a number of unique MCAs into a single, limited payment. It allows business owners the flexibility to pay down suffocating debt while continuing to grow their business. These loans can reduce monthly MCA payments by as much as 50%.
Reverse Consolidation and Debt Consolidation
Debt consolidation and MCA consolidation are two very different things. Reverse consolidation provides the funds necessary to meet MCA remittances and draws a small, negotiated payment in return. As extant MCAs are paid off, the deposited funds decrease, as do the payments. This arrangement is much more like restructuring a loan than it is like debt consolidation, which simply creates new debt on top of extant debt.
Refinancing MCA Consolidation Loans
When reverse consolidation terms end, so do MCA funding payments as well as the monthly payments. Reverse consolidation companies, however, maintain generous terms for compliant business owners that wish to continue to receive funding by refinancing.
Reverse consolidation funding benefits both the business owner and the lending institution. The company gains a secure lending partner with legitimate and stable collateral, while the borrower gains a partner on the path to financial stability, security, and success. If you are struggling in the merchant cash advance cycle, learn more about reverse consolidation today.