MCA payments squeezing your cash flow? Your options besides another advance
When daily or weekly merchant cash advance payments eat into the cash you need for inventory, the quickest fix on offer is usually another advance. That often makes the squeeze worse. Here are the other options, in the order most sellers should try them.
Why another advance usually makes it worse
A second advance taken to cover the first adds a new payment on top of the old one. If each advance takes 10% to 15% of daily sales, two or three of them can take a third of revenue before you pay for inventory, ads or payroll. The squeeze returns sooner and harder.
Before you sign another advance, work through the options below.
Your options, in order
| Option | How it works | What to watch |
|---|---|---|
| 1. Ask your funder for a reconciliation or adjustment | Many advances repaid as a share of sales let you ask for payments to be adjusted when sales drop. Ask what your agreement allows | Get any change in writing. It may extend how long you pay |
| 2. Change the payment frequency | Moving from daily to weekly debits does not lower the total, but it can line payments up with your payouts | Not every funder offers it |
| 3. Free up cash in the business | Clear slow-moving stock, trim ad spend that is not paying back, and ask suppliers for longer terms | Slower, but adds no new debt |
| 4. Payoff consolidation | A new funder pays off your existing advances so they close, and you repay one balance over a longer term | Compare total payback with what you owe today |
| 5. Refinance the most expensive advance | Pay off one advance, usually the costliest or the one with the biggest daily payment | Read your agreement for limits on new financing first |
| 6. Settlement, as a last resort | A negotiated reduced payoff when you truly cannot pay | Default actions, damaged relationships, and possible personal guarantee exposure |
How to know which one fits
Start with one number: the share of your weekly revenue going to advance payments. If it is high but the business is profitable underneath, the problem is timing, and adjustment, frequency changes or consolidation can fix it. If the business can't cover the debt at any payment size, a longer term only delays the problem.
Our guide to getting out of stacked advances shows how to rank each balance, and MCA debt consolidation for ecommerce sellers compares the consolidation options.
Before you call anyone
Frequently asked questions
What can I do if my MCA payments are too high?
Ask your funder about adjusting payments to your actual sales or changing the payment frequency, free up cash in the business, or look at payoff consolidation, where a new funder pays off your advances and you repay one balance over a longer term.
Should I take another merchant cash advance to cover my payments?
Usually not. A second advance adds a new payment on top of the old one, so more of your daily sales go to repayment and the squeeze tends to come back sooner.
Can a merchant cash advance payment be lowered?
Often, if it is repaid as a share of sales. Many agreements let you request an adjustment when sales drop. Check your agreement and get any change in writing.
What is MCA reconciliation?
Reconciliation is a review of your actual sales so that payments on a sales-based advance match what the agreement says you should pay. If sales fell, payments can come down for that period.
Onramp Funds
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