Reverse MCA Consolidation Loan | What is it?

Unlike a traditional consolidation, a reverse consolidation, also know as a reverse MCA, pays the debt ahead of schedule, but not all off at once. Typically, a reverse consolidation funder will pay their client’s debt a week at a time. You, in turn, pay your funder a lower amount weekly than they are paying on your debt. This method allow the reverse consolidation funder to extend the term, making your payments more affordable. It only pays your debt up a week at a time because it’s designed for those who do not qualify for a tradition consolidation.

These type of consolidations are very effective at giving payment relief. In fact, by consolidating in this fashion, the reverse funder is able to lower client payments as much as 40%-60%.

Reverse consolidations are for high-interest debt such as merchant cash advances (MCA’s), business credit cards and unsecured business loans.

Pros and Cons of a Reverse Consolidation

PROS:

A reverse consolidation is an avenue that helps overwhelmed borrowers afford their payments. But that’s just the beginning of the benefits.

Other benefits include:

• It cost less than bankruptcy.
• Less time consuming and stressful than bankruptcy.
• Approval is less restrictive compared to a consolidation or SBA loan.
• Weekly payments instead of daily payments.

Really, it is very effective at achieving it’s designed purpose – giving relief for high-interest, high-risk debts.

CONS:

The drawbacks to a reverse consolidation include:

• Fees amount to more than the interest associated with a traditional consolidation.
• Shorter term options compared to an SBA loan.
• More frequent payments than with an SBA or consolidation loan.

Avoid Taking On More Cash Advances Loans

An equally important key to turning around a bad financial situation is avoiding additional high-cost funding. Looking for cost saving options as opposed to additional funding will help your financial stability more in the long run. You can use the cost savings to put away money for unexpected business expenses. This way, when an unexpected expense arises, you will have the money to deal with it and not need to borrow money.

Once you have paid off your debts, continue to practice cost saving ideas and self funding of expected and unexpected business expenses. This will help your bottom line drastically. It will also help you become eligible for traditional funding if ever needed for a justifiable reason such as expansion.

When to Consider Applying For a Reverse MCA?

It becomes pretty obvious to a business owner/owners when they are in need of relief from MCA debts. Usually, at this point a business is operating in the red. As the business owner, you are most likely not making a personal income from your business and you may be having to slow pay vendors or use saved money to cover business operations, expenses and payroll. Out of desperation, you may be considering bankruptcy or applying for another high-interest loan to stop the bleeding. This is a very good description of the type of scenario a reverse consolidation is for.