Glossary · Deal flow
Consolidation
An MCA consolidation is a new advance that pays off one or more existing advances at funding, so the merchant ends up with fewer debits and, ideally, a lower total payment.
Also called MCA consolidation, debt consolidation for MCA, buyout
The new funder sends part of the advance straight to the existing funders, based on their payoff letters, and the rest to the merchant. The payoffs reduce the net funding, so a large advance can put little cash in the merchant's hands.
Consolidations need current payoff letters, an accurate list of positions and a clear comparison of the old combined payment with the new one. Show the merchant both numbers before they sign.
Formula
net to merchant = advance − origination fee − other fees − payoffs
Example
A $100,000 advance with a 3% fee ($3,000) that pays off $62,000 of existing balances leaves $35,000 for the merchant.
Track it on every deal
Statements, offers, positions and commissions with the math worked out, in one CRM for lending companies.
Related
- FeatureOffer calculator and comparisonEnter advance, factor, buy rate, fees and frequency and get payback, net funding, payment, term, holdback and your commission. Compare every lender's offer side by side.Read
- Free toolMCA factor rate calculatorFree merchant cash advance calculator. Enter the advance, factor rate, fee and term to get payback, daily or weekly payment, cost of capital and an APR estimate.Read
- Free toolStacking and positions calculatorAdd up a merchant's existing MCA positions and a proposed advance to see combined holdback, the risk band, and the largest new payment and advance that still fit.Read
- GlossaryReverse consolidationA reverse consolidation gives an over-stacked merchant weekly funding that covers existing MCA payments, replacing several daily debits with one smaller payment over a longer term.Read
- GlossaryNet fundingNet funding is the cash a merchant actually receives: the advance minus origination and other fees and minus any payoffs of existing advances.Read
- GlossaryPositionsA position is one open cash advance on a merchant's account, numbered in the order taken: first position, second position and so on.Read
- GlossaryRenewalA renewal is a new advance to a merchant who has paid down an existing one. It pays off the remaining balance, and eligibility usually starts at 40 to 60% paid in.Read
- GlossaryStackingStacking means a merchant takes more than one cash advance at the same time, so several funders debit the same bank account and the combined holdback climbs.Read