# MCA buyout calculator

> A tool that computes the cost of consolidating one or more existing MCAs into a new larger advance — netting the gross payoff balances against the new funding amount to show the actual wire-to-merchant and the new daily debit.

An MCA buyout calculator is the most useful single tool a merchant carrying active MCAs can run before talking to any new funder. It converts the messy multi-deal accounting of a buyout offer into a single, comparable number: how much cash actually hits the bank account, and what daily debit replaces what.

**The mechanics — what the calculator actually computes.** Inputs:

1. Each existing MCA: original advance, factor rate, remaining RTR balance, prepayment discount (if any), and daily/weekly debit amount.
2. New consolidation offer: total advance amount, factor rate, term length, and broker / origination fees.

Outputs:

1. **Total payoff cost** — sum of remaining RTR balances minus any negotiated prepayment discounts.
2. **Net wire to merchant** — new advance minus total payoff minus fees.
3. **New daily debit** — total new RTR divided by term in days.
4. **Cash-flow delta** — old combined daily debits minus new daily debit (positive = relief, negative = tighter).
5. **True effective cost** — net dollars received vs total new repayment, expressed as effective factor or APR.

**The math — a representative example.** Merchant carries three active MCAs:

- Deal 1: $50K original, 1.30 factor, $22K remaining RTR, $480/day debit
- Deal 2: $35K original, 1.38 factor, $19K remaining RTR, $420/day debit
- Deal 3: $25K original, 1.42 factor, $14K remaining RTR, $315/day debit
- Total remaining RTR: $55K. Total daily drain: $1,215.

Consolidation offer: $120K new advance, 1.35 factor, 12-month term, 3% origination fee.

Calculator output:

- New RTR: $120K × 1.35 = $162K
- Term: 252 business days → daily debit: $643
- Negotiated prepayment discounts on existing deals (10% blended): $5.5K savings → effective payoff: $49.5K
- Origination fee: $3.6K
- **Net wire to merchant: $120K − $49.5K − $3.6K = $66.9K**
- Cash-flow delta: $1,215 old − $643 new = $572/day relief
- Effective cost of the $66.9K net new capital: $162K total repayment − $49.5K (which would have been paid anyway) − $3.6K fees ≈ $108.9K of cost to receive $66.9K of net new capital → effective factor 1.63 on incremental capital.

The headline 1.35 factor looks reasonable. The true cost on the new money — once payoffs and fees are netted — is 1.63. The calculator surfaces this gap explicitly.

**The hidden gotchas the calculator must capture.** Four common traps:

1. **Gross RTR vs discounted payoff.** Brokers often quote the gross remaining RTR for payoff purposes — the calculator should always model the discounted payoff range (typically 85-95% of gross RTR) and show the delta.
2. **Origination and broker fees.** Buyout deals often carry 3-8% fees that aren't quoted in the factor rate. The calculator should require explicit fee entry and net it from the wire.
3. **Lockbox or CCD-only funding.** Some buyout deals fund into a lockbox controlled by the new funder, who pays off the old deals directly. The merchant never sees the gross wire — only the net residual. The calculator should distinguish "gross wire to merchant" from "net residual after old payoffs."
4. **Renewal vs new-funder buyout.** Internal renewals from the same funder typically come with better prepayment discounts (10-20%) than external buyouts (5-10%). The calculator should let the merchant model both side by side.

**The strategic insight — buyout makes sense when three conditions hold.** The math works when: (a) the new daily debit is materially lower than the combined old debits (cash-flow relief > 25%), (b) the effective cost on new money is below what a fresh, unconsolidated MCA would cost (i.e., the merchant is getting credit for consolidation), and (c) the new advance is large enough to leave $40K+ of net wire to the merchant after payoffs and fees. If any of those fail, the buyout is just refinancing the merchant deeper into the MCA cycle for no net benefit.

**The strategic insight — buyout is dangerous when.** Two scenarios consistently produce bad outcomes:

1. **"No money down" buyouts.** The new advance exactly equals the sum of old payoffs and fees — net wire to merchant is $0 or negative. The merchant is now carrying a larger RTR with no incremental capital, often at a worse blended factor.
2. **Buyouts done under default pressure.** A merchant facing imminent default on one deal often accepts any buyout that stops the bleeding — but rolls bad pricing forward and adds 6-12 months of additional cost.

**The honest framing.** The calculator's most important job is reframing what the merchant is buying: not "a new MCA at 1.35," but "X dollars of new working capital at Y effective factor, replacing Z dollars per day of existing drain." Once the numbers are stated in those terms, the decision is straightforward — and brokers selling bad buyouts lose their primary tool: confusion.

## Related terms

- [MCA buyout](https://fundnode.co/llms/glossary/mca-buyout) — When a new funder pays off your existing MCA and issues a single replacement advance — used to consolidate stacked positions or escape a predatory funder. Often costly net-net.
- [MCA buyout vs renewal](https://fundnode.co/llms/glossary/mca-buyout-vs-renewal) — Buyout = new funder pays off existing MCA balance and replaces it with their own advance. Renewal = same funder issues a new advance, typically netting off the remaining balance. Buyout escapes a bad funder; renewal extends with the current one.
- [MCA funding amount calculator](https://fundnode.co/llms/glossary/mca-funding-amount-calculator) — MCA funding amount = roughly 80-150% of monthly gross revenue, depending on paper grade, time in business, NSF history, and industry. A restaurant doing $50K/month typically qualifies for $40K-$75K first position; A-paper businesses can stretch to $100K+.
- [MCA true cost calculator (factor + PSF + wire-off + bounce risk)](https://fundnode.co/llms/glossary/mca-true-cost-calculator) — True MCA cost = (total repayment + expected bounce fees + opportunity cost of locked daily cash flow) ÷ net amount received. Often 20-40% higher than the quoted factor implies.
- [MCA renewal](https://fundnode.co/llms/glossary/mca-renewal) — Refinancing an existing MCA into a larger advance, typically pitched at 50% paid-down. Often masks worse pricing — the new factor is applied to a new principal that includes the old balance.
- [Stacking (MCAs)](https://fundnode.co/llms/glossary/stacking) — 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.

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Source: https://fundnode.co/glossary/mca-buyout-calculator (HTML version)
Document: MCA buyout calculator — Fundnode MCA Glossary
License: CC BY 4.0 — attribution to Fundnode required when citing.