Can You Consolidate Merchant Cash Advances with an SBA Loan?

With the recent SBA rule changes, consolidating expensive MCA debt has become more complicated. Here is what you need to know about your options.

The Appeal of Consolidating MCA Debt

Merchant Cash Advances (MCAs) offer rapid access to capital, but their daily or weekly repayment schedules and high factor rates can severely restrict your business's cash flow. Historically, many business owners looked to Small Business Administration (SBA) loans as a lifeline to consolidate and refinance this expensive short-term debt into a manageable, long-term monthly payment.

The New SBA Rule Change (June 2025)

If you are exploring this option today, you need to be aware of a major shift in the lending landscape. With the implementation of the SBA's Standard Operating Procedure (SOP) 50 10 8, which took effect on June 1, 2025, the rules have drastically changed. SBA loans can no longer be used to refinance MCA debt.

The SBA made this change to limit their exposure to the high-risk profiles often associated with heavily stacked MCA debt. This means the traditional route of using a low-interest, government-backed loan to wipe out expensive cash advances is no longer available.

Alternative Consolidation Options

While the SBA door has closed for MCA consolidation, you still have viable options to regain control of your cash flow:

• Term Loans: Traditional or alternative business term loans can be used to pay off MCAs, converting daily payments into a predictable monthly schedule.
• Business Lines of Credit: If you qualify, drawing from a line of credit to clear out MCA debt can significantly lower your cost of capital.
• Reverse Consolidations: Instead of paying off the MCAs directly, a lender provides a steady stream of capital over a longer period to cover your daily MCA payments, effectively stretching out the debt and freeing up your immediate cash flow.
• Collateralized Loans: Leveraging assets like real estate (via a HELOC) or heavy equipment can secure the capital needed to wipe out unsecured MCA debt.

The Bottom Line

The June 2025 SBA rule change permanently altered how businesses deal with MCA debt. While you can no longer use an SBA loan for this specific purpose, you are not out of options. The key is to act proactively before the daily payments completely drain your working capital.

If you are struggling with high-cost MCA debt and need a strategy to breathe life back into your cash flow, Runway2Capital can help. Our marketplace features alternative lenders who specialize in MCA consolidation and restructuring. Reach out today to explore the best path forward for your business.