Glossary · Deal flow
Reverse consolidation
A 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.
Also called reverse consolidation MCA, reverse consolidation loan, MCA reverse consolidation
In a regular consolidation a new funder pays off the existing advances in one lump sum. In a reverse consolidation the new funder does not pay them off. It makes regular deposits into the merchant's account (often weekly) that cover the existing daily payments, and the merchant repays the new funder on a longer schedule with a lower payment.
The product is aimed at merchants who are struggling under several positions. It can lower the payment burden in the short term, but it usually adds cost and stretches the term, and it sits close to debt settlement. It draws regulatory attention, so expect extra review from funders and compliance.
Track reverse consolidations as their own deal type so they are easy to report on and so extra compliance review can be applied to them.
Terms and legality vary by product and state. This is general information, not legal or financial advice.
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- FeatureDeal pipelineA deal pipeline built for lending: 22 statuses in five phases, board and table views, time in status, stips and conditions, underwriting notes and a locked pricing block.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
- GlossaryConsolidationAn 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.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
- 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
- GlossaryDefaultIn an MCA, a default is a breach of the contract, such as blocking the funder's debits, switching banks, diverting receipts or stacking against terms.Read
- GlossaryHoldbackHoldback is the share of a merchant's revenue that goes to repaying a cash advance, either a fixed split of card sales or the effective share taken by fixed ACH payments.Read