Refinancing guide · Sorbus Finance
Can you refinance or consolidate a merchant cash advance?
Quick answer
A merchant cash advance can sometimes be settled with a new facility, but it is often structured as a purchase of future card sales rather than a loan, and settlement terms vary by contract. Early settlement may not reduce the fixed cost agreed. Check the contract and get a written settlement figure before comparing any refinance.
How is a merchant cash advance different from a loan?
With a typical merchant cash advance, a provider pays an amount upfront and collects an agreed total through a percentage of future card or sales receipts. Because of that structure, many are not loans in the legal sense, and contracts vary considerably between providers.
Depending on the provider, the agreement may show a fixed total or factor rate. A factor rate alone is not an annual percentage rate: timing, fees and the payment profile also matter. Where collections are genuinely sales-linked, they can rise and fall with sales; check for minimum collections or reconciliation conditions in your agreement.
| Feature | Typical merchant cash advance | Typical term loan |
|---|---|---|
| Legal form | Often a purchase of future receivables; check contract | Loan agreement |
| Cost expression | Fixed total or factor rate | Interest rate and fees |
| Repayment | Percentage of sales, varies | Fixed or scheduled instalments |
| Early settlement | Contract-specific; fixed cost may still apply | Settlement terms in agreement |
Does settling an MCA early save money?
Not necessarily. If the contract sets a fixed total to be collected, settling early may still require that full amount. Some providers offer discounts, others do not. Only the provider's written settlement figure tells you the true cost.
When might replacing an MCA be worth exploring?
Where sales-based collections are taking a share of takings that leaves too little for other costs, or where several advances have been layered, replacing them with a single scheduled facility may make cash flow more predictable. Compare the settlement amount plus the new facility's total cost with what remains to be collected.
What if you have more than one advance?
Multiple concurrent advances can stack collections against the same sales. Some contracts restrict taking further funding. List each provider, the remaining amount to collect and any restrictions before approaching a new lender.
Before refinancing an MCA
- Contract copy and any restrictions on further funding
- Written settlement figure from each provider
- Remaining amount to be collected under each advance
- Recent card-takings history
When should you not borrow to refinance?
Be candid with yourself. Refinancing is probably the wrong move if:
- Taking a new advance to clear an existing one without comparing totals
- Assuming early settlement reduces the agreed cost
Free, independent help is available from Business Debtline. Check its eligibility and remit for your business.
General information, not financial, legal or tax advice. This page explains concepts in a UK context. Whether any option is available, and on what terms, depends on the lender, the specific agreement and your business's legal structure. Sorbus Finance is a broker, not a lender. Read our initial disclosure and commission disclosure.
Frequently asked questions
Is a merchant cash advance regulated like a loan?
Treatment depends on the contract structure and the parties. Many are not structured as loans. Check the contract and take advice if regulatory status matters to your decision.
Can I convert a factor rate into an APR to compare?
Not from the factor rate alone. An annualised comparison also depends on fees and when payments are made, which may vary with sales. Compare the total amounts, forecast collection timing and contract conditions; obtain a properly calculated annualised figure where appropriate rather than treating the factor rate as an APR.
Will a lender refinance an MCA with my card terminal provider?
Some arrangements are tied to how card receipts are split. Check whether changing provider or settling affects your payment processing setup.
Prefer to talk it through?
Leave your details to request a discussion about your borrowing. This form is an enquiry, not a loan application. Ask the adviser what consent and credit checks would be needed before a lender application proceeds.