MCA cash flow relief for a service business

The situation

A residential services business owner in the Hudson Valley came to us carrying three active merchant cash advance (MCA) positions with three different funders. Each advance had been taken out over a period of about 14 months — the first to cover equipment, the second to bridge a slow season, and the third to catch up on accounts that had slipped during a busy stretch. At the time of our review, the combined daily ACH deductions were pulling roughly $1,100 from the business bank account every business day.

The challenge

The owner understood, in a general sense, that the payments were heavy. What was harder to see was how much of that daily pull represented actual principal repayment versus the cost of funding — and what the true payoff timeline looked like across all three positions. Two of the three MCAs had been offered "renewal" deals by their funders. The owner wasn't sure whether taking those renewals would help or extend the problem.

What we reviewed

Mapping the full payment stack

We started by pulling together the contracts, remittance histories, and outstanding balances for all three advances. For each position, we calculated the remaining payback amount, the effective cost of capital (using a factor rate to annual cost conversion), and the approximate weeks of payments remaining at the current daily ACH rate. Stacking these side by side made the full picture visible in a way that reviewing each contract individually had not.

Evaluating the renewal offers

Both renewal proposals involved adding new money on top of outstanding balances — a common structure in MCA renewals sometimes called a "net funded" or "stack renewal" arrangement. We modeled what the combined payback obligation would look like under each renewal scenario versus paying off the current positions as-is. In both cases, the renewals would have added months of daily payments and significantly increased the total cost.

Identifying the payoff sequencing opportunity

One of the three MCAs had a relatively small remaining balance and a high factor rate — the most expensive money per dollar borrowed. We identified this as the logical target for early payoff, which would reduce daily ACH pressure faster than proportional reduction across all three. We also reviewed whether any of the contracts included early payoff discount provisions, which one did at a modest rate.

Reviewing alternative capital options

Given the business's revenue profile and the time in business, we reviewed whether traditional bank financing, SBA products, or CDFI lending might be realistic alternatives to MCA renewal. We walked through the documentation that would typically be required, the likely timeline, and the credit and revenue thresholds lenders in those categories typically look for — so the owner could assess whether building toward that path made sense.

Outcome

The owner declined both renewal offers after reviewing the cost analysis. The highest-rate MCA with the smallest balance was targeted for early payoff using available cash reserves, which reduced the daily ACH stack by roughly $340 per business day. The owner also began separating business and personal banking more cleanly — a step that would support better documentation if a conventional loan application made sense in the future. The review did not involve negotiating directly on the owner's behalf, but gave them the information they needed to make their own decisions with confidence.