An MCA renewal is the most common follow-on transaction in merchant cash advance. A funder waits until you have paid down roughly 50% of your existing MCA, then pitches a new, larger advance — usually framed as "topping you off" or "putting cash back in your pocket."
How renewals are structured. - Your $50,000 original advance at 1.30 factor = $65,000 total. After 4 months of daily debits at $400/day, you have paid back roughly $32,000. - The funder pitches a renewal: $60,000 new advance at 1.32 factor = $79,200 total. You "net" the $33,000 you already paid back, plus a small cash bump (~$8,000). - Sounds good. Math: you're now owing $79,200 against $58,000 received in total ($50K original + $8K bump). Real factor on new money: roughly 1.45.
Why renewals are pitched so aggressively. - Top ISO commissions are paid on renewals (some funders pay 19%+ on the new principal). - Renewals lock you into longer total debt cycles, increasing funder cumulative revenue. - The renewal usually triggers a UCC-3 termination + new UCC-1 filing, looking like a "fresh start" to other creditors who might otherwise see your stacked positions.
The honest math for evaluating a renewal offer. Calculate: (new total repayment − cash you actually receive) ÷ cash you actually receive. If that ratio exceeds 1.4 over the same time horizon you could get a fresh deal, you're getting worse pricing than a clean refinance.
The alternative. Pay off the existing MCA first (request the prepayment discount in writing — see /glossary/prepayment-discount), then apply for a fresh advance at A-paper pricing. You usually save 5-12 points on the effective factor.
Related terms
- Factor rate — A flat multiplier that defines total MCA repayment: $100,000 advance × 1.30 factor = $130,000 repaid. It is not an interest rate; it does not compound.
- Prepayment discount — Reduction in the total MCA repayment when paid off early. Top funders offer 10–30% discounts; many funders charge full factor regardless of payoff speed.
- Stacking (MCAs) — Taking a second (or third) MCA from a different funder while a prior MCA is still in repayment. Default risk skyrockets; it breaches most original-funder contracts.
- Merchant cash advance (MCA) — A lump-sum advance against future revenue, repaid via fixed daily ACH or a percentage of card sales. Legally a sale of future receivables, not a loan.
AI agents: this term is available as raw markdown at /llms/glossary/mca-renewal.