How to refinance your merchant cash advance can seem like an overwhelming process if you’ve never done it before, but fortunately, plenty of other entrepreneurs have done this, and you can benefit through the wisdom they gleaned from their successes and their business mistakes. This guide on how to refinance your MCA in 5 steps will walk you through how to find an alternative lender that will be willing to give you an even lower interest rate than your original provider, as well as how to negotiate the payment terms that make sense to you and your business.
Step 1: Research
Research the competitive landscape and find out who your competitors are. Who has the best rates? What is their customer service like? Which companies offer the best terms? When you have narrowed it down, start negotiating with a few of them. Be sure that you understand all of their requirements for approval and make sure you can meet them before committing. Keep in mind that the company’s rates change daily so keep checking for better deals.
Step 2: Get Pre-Approved For A New Loan
If you’re considering refinancing your merchant cash advance, the first step is getting pre-approved for a new loan. This will give you a benchmark to compare rates and terms so that you can get the best offer. Getting pre-approved also means you’ll have more information when it comes time to negotiate with lenders and make an informed decision about which one offers the best deal.
When it comes time to actually apply for refinanced loans, most banks will require financial records that are at least 90 days old in order to approve your application and finalize your loan. It’s important that these documents be complete, accurate, and up-to-date so that your chances of approval are as high as possible.
To get started on this process, gather all of the following documentation
Step 3: Negotiate With Your Current Lender
This is the point where you have to decide what’s more important: the monthly payment or the interest rate. If you need a lower payment, then your best bet is usually to extend the term of your loan. That way, you can make a lower monthly payment but still pay off your loan at a similar time as if you had gone with the original term. However, there’s always the risk that something will happen and prevent you from being able to pay your monthly payments. In that case, it could be better for you financially if you go with a higher interest rate on a shorter term so that at least one of those things will help protect your investment.
Step 4: Apply For A New Loan
You will be able to fill out the application for a new loan on the lender’s website or over the phone. If you are applying for financing from a bank, you will need your three most recent bank statements and copies of your latest tax return. You should also provide a list of all outstanding debts, including any loans with balances due. If you are applying for financing from an alternative lender, they may ask for more documentation.
Step 5: Waiting For Approval
The last step is to wait. Approvals can take up to 90 days, and it’s important not to get discouraged if you don’t hear back right away. If you’re approved, then congratulations! You’ve just completed the process of refinancing your merchant cash advance. If your application is denied, don’t worry: there are plenty of other options for financing out there.