Finding Cash Flow Savings with MCA Loans

If you have been paying more than one cash advance at a time, this MCA debt savings calculator will give you some sobering insight into what percent of your business’ available ‘on hand’ cash is being used to pay down expensive MCA debt. The goal of a Reverse Consolidation is to lower this debt servicing amount by extending the timeframe of your total MCA payback. Keep in mind, this is all done without notifying your current MCA funders.

To find your debt servicing rate:

  1. Total up all the daily and/or weekly payments. This will calculate the cumulative monthly payments.
  2. By entering your monthly gross revenue, the percentage of your monthly debt servicing can be calculated.
  3. With a Reverse Consolidation, money is deposited weekly into the business bank account to cover all current MCA debt commitments and a smaller payment is then charged.
  4. This will lower the business’ debt servicing commitment, allowing your business to pay less in MCA payments over a longer period of time.
  5. The goal of a Reverse Consolidation is to lower the debt servicing ratio for the business, which will give the business more time to pay-down MCA debt.

Why does debt servicing matter? To function properly, your business needs to pay for everyday business activities (paying vendors, bills, employees, inventory), so when the business is shouldered with repaying MCAs over a short period of time, on hand cash that normally pays for business operations is now being used to service MCA payments. When we analyze a business with multiple cash advances, we can see that the most recent advances were taken usually for the sole purpose of satisfying the current MCA payments. Basically, the business owner has to borrow more money for the sole purpose of being able to afford current MCA payments. This practice, although seemingly necessary, will further stifle available cash, all while increasing the monthly debt servicing ratio.

A reverse consolidation eases the cash outlay and extends the term of the MCA commitments, by allowing the business to pay less money in the meantime.

This calculator shows the amount of money a business is paying in cumulative MCA payments at a given moment. Here are some things to notice.

  1. Debt Servicing exceeds the profit margins: What are the profit margins of your business? If the debt servicing ratio is higher than your business’ normal profit margins, this means that your business is no longer ‘profitable’, since the margins are just satisfying debt servicing.
  2. High debt servicing is unsustainable. If the business continues to over extend itself in debt servicing, the business will not be able to afford to pay for regular business operations (if the debt servicing is too high, cash normally used to conduct business will be diverted to paying MCA debt, which will lead to the inability to pay for regular business operations).

Key Takeaway:

If your business is spending more than 20% in debt servicing, your profitability margins are most likely being affected. This is when your business will feel a ‘cash crunch’ due to the quick payback model of Cash Advances.

Why right now is the worst time to have multiple cash advances. As you are paying back multiple cash advances, you are putting your business at serious financial risk.

  1. High Debt Servicing-When profit margins are then applied to serve debt, the business will eventually become unprofitable.
  2. More Expensive Operating Expenses-In 2025 inflation and the high cost of goods and services are already affecting the profitability of small businesses. This coupled with a high debt servicing load will negatively impact business profitability.

Don’t risk defaulting on your MCAs. Join the hundreds of small businesses that have gotten out of MCA debt with a  Reverse Consolidation. Apply now for a non-committal offer.

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