# MCA portfolio consolidation

> MCA portfolio consolidation replaces 2–4 existing advances with one new advance, reducing daily payments and extending term. Total cost is typically higher, but cash flow improves significantly. Available from a small set of specialized consolidation funders.

When a merchant has stacked multiple MCAs and the combined daily ACH burden is crushing cash flow, consolidation is one of the few legitimate paths to relief without default or bankruptcy. It is also one of the most misunderstood products in the MCA category.

**The mechanics.**

A consolidation funder underwrites the merchant's combined existing MCA debt and offers a single new advance large enough to pay off all existing balances. The merchant's daily payments drop because (a) the new advance has a longer term and (b) only one funder is debiting daily instead of three or four.

Example:
- Merchant has 3 MCAs with combined remaining balance of $120K and combined daily debits of $1,800.
- Consolidation funder offers $150K advance at 1.42 factor, 18-month term, $480/day.
- $120K of the new $150K pays off existing MCAs; $30K to merchant as working capital.
- Daily debit drops from $1,800 to $480.

**Who offers consolidation in 2026.**

The consolidation market is small — perhaps 8–15 funders nationally write material consolidation paper.

- **Kapitus.** Has dedicated consolidation product; underwrites $50K–$500K.
- **Forward Financing.** Selective consolidations on B-paper merchants.
- **Reliant Funding.** Mid-tier consolidations.
- **Smart Business Funding.** Specialized in consolidation, accepts more challenging files.
- **Mantis Funding.** Aggressive consolidator; higher factor rates.
- **A handful of others** — newer entrants and brokers with proprietary consolidation programs.

Most major funders (OnDeck, Credibly, Rapid) do NOT write consolidations — they consider it too high-risk and prefer to be the original funder.

**Pricing.**

Consolidation paper is priced significantly higher than new-money MCA:
- **Factor rate.** 1.35–1.50 typical; 1.55+ on challenging files.
- **Term.** 12–24 months (vs. 6–12 for standard MCA).
- **Holdback.** 8–15% of revenue (similar to MCA standard).
- **Fees.** 3–5% origination fee common (vs. 1–3% on standard MCA).

**The math reality.**

Consolidation trades cash flow for total cost. Almost always, the consolidation total payback exceeds the sum of remaining payments on the existing MCAs.

Example continued:
- Existing 3 MCAs: $120K remaining × average ~1.12 cost-to-finish = $135K total to pay off existing.
- Consolidation: $150K × 1.42 = $213K total payback.
- Difference: $78K more in total cost, but daily cash burden drops by $1,320.

The math makes sense only if:
1. The merchant cannot survive 6 months at current daily debit levels.
2. Or the merchant can use the cash flow relief to grow revenue substantially.
3. Or the alternative is default + bankruptcy (which has higher cost still).

**Underwriting criteria.**

Consolidation funders look for:
1. **Revenue trajectory.** Maintained or growing, not declining.
2. **Days in business.** 2+ years preferred.
3. **NSF history.** Limited NSFs in last 6 months despite stacked debt.
4. **No active default.** Cannot be in default on any existing advance.
5. **No existing UCC liens** beyond the MCAs being consolidated (no equipment financing, no SBA, ideally).
6. **Industry.** Avoid certain industries (cannabis, adult, firearms, gambling).

**Process.**

1. Merchant submits application + bank statements + list of existing MCAs.
2. Consolidation funder contacts existing funders for payoff letters.
3. Underwriting modeling — typically 3–7 days.
4. Offer issued with combined daily debit.
5. At funding, consolidation funder wires payoffs directly to existing funders; remaining cash goes to merchant.
6. Existing funders release UCC liens; consolidation funder files new UCC.

**Risks.**

1. **One funder still has UCC priority.** If consolidation fails to pay off all existing funders on day of funding, you have a UCC contest.
2. **Stacking on consolidation.** Some merchants take new MCAs on top of consolidation within months — recipe for disaster.
3. **Personal guarantee.** Often expanded relative to original MCAs.
4. **Industry shift.** If revenue drops, the now-longer term + higher factor magnifies pain.

**Alternatives.**

1. **Reconciliation negotiation** with existing funders (free; preserve cash but no new capital).
2. **SBA 7(a) refi.** If credit qualifies; takes 60–90 days but APR 8–11% vs. consolidation 40–60% effective.
3. **Subchapter V bankruptcy.** Restructure rather than refinance.
4. **Settlement negotiation.** Settle existing MCAs at discount (50–70 cents); requires merchant has lump sum.

**Common confusion.** First, "consolidation lowers my total cost" — false; almost always increases total cost. Second, "consolidation always available if I have a stack" — false; many merchants are too far gone for consolidation funders to underwrite. Third, "consolidation prevents default" — only if cash flow problem is resolved; if revenue keeps dropping, consolidation just delays default.

## Related terms

- [MCA debt relief options (detailed)](https://fundnode.co/llms/glossary/mca-debt-relief-options-detailed) — Merchants stuck under unaffordable MCA stacks have five practical relief paths in 2026: reconciliation, settlement, consolidation, Subchapter V bankruptcy, and (rarely) litigation defense. Each has different cost, timeline, and credit impact.
- [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.
- [MCA renewal strategy (typical)](https://fundnode.co/llms/glossary/mca-renewal-strategy-typical) — A typical MCA renewal happens when 50–70% of the original advance is paid off (Day 90–150 of a 9-month term). Funder offers a new advance at slightly better factor, with the remaining balance rolled in (refinance) or paid off separately (standalone renewal).
- [Reconciliation (MCA)](https://fundnode.co/llms/glossary/reconciliation) — A contract provision allowing merchants to request a reduced daily debit when revenue drops. Required for MCAs to remain legally a 'sale,' not a 'loan' in most states.

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