Nothing is more exciting than expanding your business and obtaining the capital you need to get your business moving. Obtaining a merchant cash advance loan is a necessary part of growing your business. It is also very normal to get different loans for other projects.
Unfortunately, these debts pile up and can put you in an uncomfortable bind while you try to manage your daily business operations. If you find yourself paying off your debt and the debt payments are interfering with your cash flow, you may want to consider an MCA consolidation loan. This guide will go over what is a MCA consolidation loan and who you can contact for the best debt management solution for your business.
What Is an MCA Loan?
An MCA loan, also known as a merchant cash advance loan, is not a loan but is a cash advance based on the credit card sales deposited into your merchant account. You may have applied for this loan because of how quickly you were able to be funded. Most applicants can receive their funds within 24 hours after approval.
Most business owners will apply for this loan because of how MCA loan providers evaluate risk. And, most lenders will look at your daily credit card deposits to determine if you are able to pay back the cash advance within a timely manner.
Unfortunately, many small business owners will opt for this cash advance because of its benefits. Many business owners forget to read and understand all the terms and conditions.
These cash advances come with high APR. They also have high daily repayments that hurt your business’s cash flow. If you find yourself struggling to keep up with your payments and you want a better way to pay back your MCA loan, you may want to look into an MCA consolidation loan.
What Is a Merchant Cash Advance Consolidation Loan?
An MCA consolidation loan is a type of funding that allows you to merge your merchant cash advance loan into one single payment. This consolidation loan will enable you to free up cash flow for your business. This loan will also consolidate more than one MCA loan into one payment.
These loans are helpful if you are looking to increase the ease of repaying all your MCA debt. This consolidation method also reduces the number of lenders that you owe money to.
MCA Consolidation Loan Process
Once you receive an approval from a merchant cash advance consolidation company, they will start the consolidation process. The consolidation company will buy out all your existing advances. The MCA consolidation company will then roll these payments into one single cash advance with stronger rates and better terms.
How to Restructure MCA Debt
Although debt restructuring and consolidation loans sound similar, they have a few differences. MCA debt restructuring is when you, the debtor, and the creditor agree on an amount that you can afford to pay back. A reputable company that does both MCA restructuring and MCA consolidation loans should be able to help negotiate with the creditor on your behalf.
MCA Consolidation vs. Restructuring
Debt restructuring and consolidation share the same goal of making your debt more manageable. They also both change your existing loan repayment terms and amounts that you owe. It is essential to know that both of these loans also require you to pay a certain amount of your debt back to the creditor.
Debt Consolidation Difference
The main difference between debt restructuring and an MCA debt consolidation loan is that there is more negotiation when you restructure your debt. The debt restructuring is built off an existing contract; it isn’t a new contract.
Although debt restructuring can be helpful, it may also hurt your credit score in the process. This is because you default on your original agreement. And it can possibly hurt how the debt reports to the credit bureaus.
MCA Consolidation Loan Difference
Unlike restructured debt, an MCA consolidation loan requires a new contract and a new application. Those who want to file for an MCA consolidation loan don’t necessarily need to have current financial hardship before filing for this loan.
Not only will this loan possibly increase your credit score, but it also allows you to have more cash flow available for your company. As long as you continue to pay your loan on time, you won’t have to worry about defaulting on your loan.
Choosing Between Restructuring and Consolidation
When trying to figure out which debt management option works best for you, you will need to look at your financial situation. Both of these options will eventually clear your debt and will free up your cash flow; it just depends on your preference. If you are still confused about which option works best for you, it is best to reach out to a professional who can point you in the right direction.
Apply for a MCA Consolidation Loan Today!
Now that you know the significant differences between an MCA consolidation loan and debt restructuring, it is time to see which option works best for you. If your business is flourishing and you are looking for a way to expand. You may want to consider obtaining an MCA consolidation loan.
If you are looking for more information on which will work best for your situation, contact us now. We here at Hasanov Capital aren’t a bank, but we are an innovating team of financial advisors. We have the knowledge and expertise needed to provide you with the best solution you need for your business.
