What is a merchant cash advance consolidation
Business owners with several merchant cash advance positions end up in a cycle of taking out more and more advances in order to avoid defaulting on existing balances. Merchant cash advance consolidations are a great solution if you have multiple advances, and need one payment.
Consolidations are a good solution for merchants who are struggling with the multiple frequent withdrawals occurring on a daily basis/weekly basis.
Merchant cash advance consolidations provide business owners with a weekly payment, directly into their bank account, in order to pay off the existing cash advance payments.
Can you get extra cash from a consolidation
You definitely can! It all depends on how much you are paying currently, and how much you need. Typically, most merchant cash advance companies are willing to give you up to 20-25% of your monthly gross deposits.
What are the benefits of a merchant cash advance consolidation
Getting a merchant cash advance is a business decision.
>Extra Capital – Because this is an unsecured form of financing, you can qualify fast and get funded in 24 hours.
>Bad Credit Friendly – Even if you have bad credit, it’s not a problem. Due to the fact this is a business cash advance, the primary thing lenders care about is how successful your business is.
How many advances can I consolidate at a time?
You can consolidate a potentially large number of advances. Typically lenders are willing to consolidate any number of advances as long as it makes financial sense. Lenders will look at your credit score, your sales, overhead, profit margins, and daily/weekly cash flow, and then work with you to see how many advances they can consolidate.
Is this the same as a business debt consolidation loan?
Yes, and no. Merchant cash advance consolidations refer to specifically consolidating merchant cash advances. Business debt consolidation is a more generic, and a bigger umbrella term. It’s referring to all aspects of your business debt, ranging from credit cards to mortgage payments, equipment financing, and more. Typically, business debt consolidation loans also include merchant cash advances. Debt consolidation loans leave you with only one payment to make, where before you had multiple payments to make.
In most cases, even after the interest rate and fees, you should have extra cash left over each month with a debt consolidation loan. Bottom line, it’s a great idea when you look at the long term. You will find that consolidating merchant cash advances will save your business thousands of dollars.
With a straightforward merchant cash advance, terms can be chosen that allow you to move your business forward, allow you to invest cash back into your business – while honoring your obligations.
How does my business qualify for a Merchant Cash Advance Consolidation?
We look at you, your cash flow, and how much you owe your existing lenders. Our goal is to stretch out the existing terms of your merchant cash advances, and create a repayment plan that cushions your business and allows you to survive without crushing your daily cash flow. There’s a good chance your business will qualify for a merchant cash advance if you’ve been making your payments. If you find that you’re constantly in debt and keep taking more and more merchant cash advances it could mean you’re stuck in an endless cycle of merchant cash advances, and have overextended yourself. Your business simply can’t withstand the loss of money – commonly associated with this type of loan.
Reverse consolidations are a great solution
If you’re struggling with frequent withdrawals on a daily, or weekly basis, this product can help. With reverse consolidations, Delancey Street provides business owners with a weekly disbursement, directly into their bank account to satisfy the existing cash advance payments. Reverse consolidations are like a cash advance, and are repaid with automatic daily withdrawals at a reduced $ amount against your outstanding cash advance loans. It’s NOT debt consolidation, nor is it loan consolidation. It’s not restructuring cash flow. It’s simply an increase in the term, and freeing up cash flow, which can prevent a business from being crippled by having too many open merchant cash advance positions.
When it comes to small business loans, debt can help your business grow and function. But there’s the bad kind of debt which sinks your business.
When that happens, there’s a lot of things that can go wrong. For small business owners, merchant cash advances are both a blessing, and potential nightmare. It all depends on whether you over-leverage yourself. It’s no surprise that MCA providers take a huge chunk out of your daily profits, and that can cause major cash flow issues when things slow down.
5 Reasons why Merchant Cash Advances Can be a Problem
Some business debt can truly help improve your business, but too much debt can hurt it. Merchant cash advances can quickly put you in debt.
Merchant cash advance debt is expensive. In addition to the repayment terms, cash advances can charge a fee. The fee is called factoring, and ranges between 1.1 and 1.5. The factor rate isn’t the same as APR. If a lender is quoting you a factor rate, you multiply it by the loan amount to find out the total amount you have to repay. All the interest is essentially represented by the factor rate. It’s possible you may end up paying more than 100% APR, especially if you take out multiple loans and renew your merchant cash advance.
You have repetitive high payments
Paying off the cash advance in less than a year sounds like a great deal, but there’s a lot of repetitive payments. There’s no benefit to paying it off quickly. If you opt for credit card split, the higher your credit card sales are – the more money you’re losing to the merchant cash advance lender that day.
They don’t help your credit
Many businesses turn to merchant cash advance when they think they have no other option. If you truly have no other option, a cash advance can work and fill the financial void. But the thing is, if you’re trying to build a business credit score, and a business repayment history, a merchant cash advance will not help you. Merchant cash advance lenders do not report your repayment history to the bureaus – and even if you successfully repay it on time, it won’t improve your business credit score.
On the other hand, merchant cash advances won’t hurt your credit history either. As a result, if you think you may have some difficulties repaying the merchant cash advance – this might be a blessing in disguise for you!
There’s a cycle of debt
You should remember this when considering a merchant cash advance. This should be a one-time, short term, funding option. Consider all loans prior to accepting a merchant cash advance. Many merchants discover there is a never-ending merchant cash advance cycle.
Delancey Street has other better loan options for you
Delancey Street has other cheaper options than a merchant cash advance. If you have any way possible of avoiding taking out a cash advance, then take that cheaper option. We have multiple options for you, like term loans, lines of credit, and more.
What options do you have for merchant cash advance debt consolidation
Paying off a merchant cash advance isn’t easy for every business. If you pay it off too fast, it can restrict your daily cash flow and impede your business. If you find yourself having too much debt from multiple cash advances, it’s time to take back control. There’s many ways to get out of merchant cash advance debt. In addition to a merchant cash advance consolidation, below are some great methods for your business.
Replace the merchant cash advance with a term loan
Replacing your merchant cash advance debt with a term loan is one of the BEST WAYS to refinance your debt into a more affordable option. Term loans are a fantastic way for business owners to consolidate their existing debt into one affordable payment. It’s not uncommon for business debt consolidation loans to have much more favorable terms than a merchant cash advance. More specifically, they have lower interest rates, longer repayment periods, and have monthly payments – not daily payments.
If you decide to go this route, make sure to let the lender know you’re going to use the funds to refinance the merchant cash advance. Some lenders put restrictions on how the funds can be used, so it’s super critical you make sure to read the fine print, and read the stipulations of any term loan you eventually apply for.
Get an asset-backed loan
An asset backed loan is a business loan which is secured by an asset. It means if you don’t pay the loan back the bank, or lender, can collect the asset to recoup the debt. There are many different types of collateral, like property, inventory, blanket lines, etc.
Collateralized loans are less risky. Lenders know there is a safety-net for them, in case you default. It makes them easier to qualify, because the asset provides immense safety and it’s much better than an unsecured business loans. Businesses with limited financial history can have a much easier time getting these types of loans if they’re willing to put up an asset as collateral.
Moreover, these loans have LOWER interest rates, and longer repayment terms than merchant cash advance consolidations. You’re almost always better off getting one of these loans if possible. Asset-backed loans are a fantastic way of refinancing your merchant cash advance debt.
Another great benefit of asset-backed loans is if you repay it successfully it appears on your credit history since many lenders report this information to credit bureaus.
Renegotiate the merchant cash advance
If you’re in debt, and your business is failing – it might be possible to renegotiate your original loan terms. When you renegotiate the merchant cash advance, you must show the lender you’re able to repay the loan according to the new terms of the loan. If your business is seeing lower credit card sales, it might be a great way to renegotiate your merchant cash advance position. The more evidence you show your lender that your business is struggling, the more likely they’re going to give you better terms and make it easier to afford the daily payment.
Merchant cash advance consolidation
If your merchant cash advance debt is from multiple positions, then you may want to consider debt consolidation. This means taking all of your loans, and consolidating them into one loan. This new loan repays all of your existing debt. Business owners engage in merchant cash advance consolidation because it lowers your average rate, and lowers the overall repayment. It also makes it easier to manage the payments. Now, you don’t have to worry about making multiple payments daily, or weekly, to different lenders. With a business debt consolidation loan you only have to keep track of one loan.
Bottom line: debt consolidation simplifies your life, and makes it much easier to repay your merchant cash advance debt.
File for bankruptcy
If you face too much debt, you may think about filing bankruptcy. This is a last resort. It can mean the difference between destroying your credit, or saving it. There are 3 options: 11, 7, or 13.