Last updated: November 3, 2026
Refinance a Merchant Cash Advance Into a Longer-Term Loan
One term loan can pay off several advances, and the agreements decide how well that works.
To refinance a merchant cash advance, a business takes out a new loan, usually with a longer term, and uses the proceeds to pay off the advance, which replaces daily or weekly withdrawals with scheduled payments.
A merchant cash advance is repaid through daily or weekly withdrawals, so a business with three advances open can see three separate debits leave its bank account in one week. Owners in that position often ask whether one longer loan could replace all of them.
The sections below cover how a term-loan payoff works, how to compare an advance with a loan, what SBA’s current rulebook says and which documents lenders ask for. For background on the loan side, see our guide to working capital financing for businesses.
What changes when you refinance a merchant cash advance
The Federal Trade Commission describes merchant cash advance companies as providing funds to businesses in exchange for a percentage of the businesses’ revenue, and says they typically make daily withdrawals from the business’s bank account until the obligation has been met.
In a refinance, a term loan pays off the advance or advances. The business then repays the new lender on the loan agreement’s schedule instead of through withdrawals tied to sales. The new loan has its own rate, term, fees and collateral, and those terms, not the size of the new payment, decide whether the refinance helped. Read the terms.
Why a smaller payment isn’t the same as a cheaper loan
A longer term lowers each payment and extends how long the debt lasts, so the total repaid can rise even as the payment falls. Total first.
In its February 2020 summary of a small business financing forum, FTC staff reported that owners expressed confusion about costs and often underestimated what they would have to pay. Judge each offer by the total repaid in dollars, fees included.
What to compare before you refinance a merchant cash advance
Agreements differ. Read yours against each offer, row by row, before you decide.
| Question | In an advance | In a longer-term loan |
|---|---|---|
| How it’s repaid | A share of revenue, collected through daily or weekly withdrawals | Payments the loan agreement sets, so ask whether they’re monthly, weekly or daily |
| How cost is stated | A factor applied to the amount advanced | A rate or annual percentage rate, plus any fees |
| When sales dip | Daily payments may move with daily sales, though some agreements fix the amount, so read yours | The schedule is set in the agreement, so ask what happens if a payment is missed |
| Early payoff | Read the agreement for any early-payoff terms | Ask whether paying early carries a fee |
| Liens | Some come with a UCC-1 filing, so read its collateral description | Often secured by the equipment or other assets, so read the collateral description |
| Personal guarantee | Check whether the owner signed one | Check for one, since 59% of firms with debt used a personal guarantee in the Federal Reserve Banks’ 2026 survey |
Paper first. Request a written payoff figure from each funder and a copy of every advance agreement. Then search UCC filings under the business’s name, because a new lender will run the same search.
Our guide to what a UCC filing is explains how far a collateral description can reach. Under UCC section 9-502, a financing statement has to name the debtor, the secured party and an indication of the collateral.
Can an SBA loan refinance a merchant cash advance?
Only sometimes. SBA’s lender rulebook, SOP 50 10, barred refinancing a merchant cash advance with 7(a) proceeds in version 8, issued in 2025. Version 8.1, effective October 1, 2026, loosened that a little. SBA’s term for an advance is a Sales-Based Repayment Agreement, and under Appendix 14 it becomes eligible only if:
Still active? Not eligible. The debt also has to have been current for the last 12 months, or for the life of the loan if that’s shorter. SBA doesn’t lend directly under the 7(a) program, so ask any SBA lender how the rule applies to your file, and read the full text on SBA’s SOP 50 10 page.
None of this makes SBA the wrong tool. For a business that qualifies and can plan around the process, an SBA-guaranteed loan can fit other goals, and our guide to equipment financing alongside an SBA 7(a) or 504 loan shows how the two work together. If a deal has already fallen through, see what to review after an SBA loan is denied.
Three numbers worth knowing before you refinance
24
Months a converted advance must have amortized before 7(a) proceeds can refinance it
Source: SBA, SOP 50 10 version 8.1, Appendix 14, effective October 1, 2026 (checked November 2026)
12
Months a debt must have been current before 7(a) proceeds can refinance it
Source: SBA, SOP 50 10 version 8.1, Appendix 14, effective October 1, 2026 (checked November 2026)
38%
Of employer firms applied for a loan, line of credit or merchant cash advance in the prior 12 months
Four things a lender will ask about your advances
More on working capital, refinancing and SBA options
Questions owners ask about refinancing an advance
So can you actually refinance a merchant cash advance?
Short answer: a new loan can pay off an advance, and whether one is on offer depends on the lender, the paperwork and the state of the business.
It’s a payoff. Not a swap. The two products are built differently, and each lender sets its own rules, so ask what it needs to see and get the total repayment in writing before you decide anything.
Is refinancing the same thing as consolidating merchant cash advances?
The difference is what the new product is: refinancing pays advances off with a loan, while consolidation often rolls them into one new advance with one withdrawal.
A new advance is still an advance. Same questions. Run it through the table above before you say yes.
Does a smaller payment mean I’m paying less?
Not always, because a longer term lowers each payment while the total you repay can still go up.
Compare the total in dollars, fees included, and the date the last payment is due. A payment that fits this month but stretches the debt over years may not be the better deal. Total first.
Can SBA loan proceeds pay off a merchant cash advance?
Not while the advance is active, because under SBA’s SOP 50 10 version 8.1, effective October 1, 2026, an active merchant cash advance isn’t eligible for refinancing with 7(a) proceeds.
One that was converted to a term loan, has amortized for at least 24 months and hasn’t been followed by a new agreement can qualify. Whether a particular lender will do it is that lender’s call. Ask early.
What do lenders ask for when you refinance an advance?
Expect to be asked for three things: each advance agreement, a written payoff figure from every funder and recent business bank statements.
Lenders also look at what’s already pledged, which is why a UCC search on your own business is worth running first. Some ask for a personal guarantee. Read it.
Do I have to be current on my payments to refinance?
It depends on the lender, but SBA’s rules ask that the debt being refinanced has been current for the last 12 months, or for the life of the loan if that’s shorter.
SBA defines current as no required payment unpaid for more than 29 days. Other lenders set their own tests. If you’ve fallen behind, be upfront. Then ask what’s possible.
What happens to the UCC-1 filing after the advance is paid off?
A UCC-1 filing doesn’t clear itself when the advance is paid off, so ask the funder to file a UCC-3 termination statement.
Under UCC section 9-513, a secured party has to send or file a termination within 20 days after your authenticated demand once nothing is owed and it has no commitment to lend. Put the request in writing. Then verify it.
Ready to talk through your advances?
Tell us what the business owes and what it needs next, and a Paramount Financial specialist will take it from there. Or start the credit application.