A merchant cash advance buys tomorrow’s receipts at a discount and then takes them out of the account every day. That is useful when payroll is Friday and the only other offer is “no.” It becomes a problem when the drafts never stop, a second advance stacks on the first, and there is no room left for food, labor, or the tax payment.
Refinancing that advance into an unsecured term loan is the move that turns a factor into an installment. Amounts run $50,000–$500,000. Terms are 3, 5, or 7 years. Complete files often fund in 3–10 business days. Pricing is quoted per file in an approximate 6%–18% band. There is no real estate collateral on this note.
Jaken Finance Group originates hard money, bridge, and DSCR on investment property. This payoff is a Preferred Funding Group referral. Use us for the building; use the referral when the problem is the ACH hitting the operating account.
Pre-qualify to refinance an MCA →
What you are actually refinancing
An MCA is usually structured as a purchase of future receivables, not as a loan with an APR on the first page. The FTC staff perspective on small-business financing describes the pattern: the provider advances cash, you repay the advance plus a factor (often 20%–50% of the amount funded), and collection is a daily or weekly pull until the purchased amount is collected.
Worked factor math:
| Line | Example |
|---|---|
| Amount funded | $120,000 |
| Factor | 1.42 |
| Total to repay | $170,400 |
| Extra cost | $50,400 |
| Estimated months to repay | 8 |
| Implied monthly outflow | ~$21,300 |
That extra $50,400 is not “interest over five years.” It is concentrated in a short window while the business is still trying to operate. Stack a second MCA on the same receipts — a pattern the FTC notes as well — and the daily pull can exceed what a slow week can support.
A term loan does something different. It amortizes. Principal and interest are baked into one monthly number. Miss a month and you are late on a note, which is serious. You are not watching a percentage of a shrinking sales day leave before rent.
Model the swap
Load the Refinance an MCA preset. Set MCA amount to remaining payoff, not the original advertisement. Set factor and months to match the current contract. Then compare monthly outflow and extra cost.
Unsecured term loan calculator
Model a 50,000–500,000 business-purpose term loan on a 3, 5, or 7-year amortizing schedule. Compare the payment to a merchant cash advance. Results are estimates — not a loan offer. Pricing is quoted per file by Preferred Funding Group.
Monthly payment
—
Fully amortizing
Total interest
—
Over the full term
Total repaid
—
Principal + interest
Effective cost
—
Interest ÷ principal
Program checklist
Term loan vs merchant cash advance
| Term loan | MCA | |
|---|---|---|
| Amount funded | — | — |
| Estimated monthly outflow | — | — |
| Total extra cost | — | — |
The dedicated unsecured term loan calculator is the same engine on its own page. Program box: unsecured term loans.
The upside of refinancing instead of stacking
1. The payment becomes a number you can underwrite. A restaurant or contractor can budget $2,760 a month. They cannot budget “whatever 18% of today’s batch is.” Predictable debt service is how you keep prime cost and rent-to-sales inside the bands lenders already watch on SBA restaurant loans.
2. You stop the stack. Each new MCA on the same receipts raises the split of sales leaving the account. Refinancing consolidates what is left into one installment and, if the file clears, lets you decline the next offer that shows up in the inbox the week after you fund.
3. Slow weeks hurt less. MCA drafts that float with sales sound flexible until sales drop and the fixed-dollar variant (a common structure) does not drop with them. An amortizing loan does not get cheaper in a slow month either — but it also does not take a larger share of a smaller week. You know the hit in advance.
4. You free collateral for the loan that should sit on an asset. Some MCA contracts reach for UCC filings, confessions of judgment, or blanket claims on receipts. Cleaning that up — when the contract and payoff letter allow it — can make a later equipment loan or property loan cleaner. Unsecured term money itself does not take the building.
5. You may actually save dollars, not just sleep. On the default MCA preset, $120,000 at a 1.42 factor over 8 months costs about $50,400 extra. The same $120,000 over 5 years at an illustrative 13.5% costs about $45,000 extra if held to term — and the monthly outflow collapses from ~$21,300 to roughly $2,760. If you prepay the term loan as cash flow recovers, extra cost falls further. If the MCA is two months from done, skip this product and finish it.
That last sentence is the honest underwrite. Refinancing is not a religion. It is a comparison of remaining cost.
When the refinance is the wrong move
- Almost paid. Enter 2 months remaining. If extra MCA cost left is smaller than term-loan interest, keep drafting.
- Need is consumer. Paying off a personal credit card or a house you live in is not a business-purpose refinance.
- The real problem is the property loan. If a rental is over-levered, an unsecured note on top of a strained DSCR does not fix coverage. Use the DSCR calculator and, if you must pull cash without replacing a cheap first, the second-position DSCR path.
- SBA is already in process and the MCA is tolerable for 60 days. A 7(a) that wraps working capital can be cheaper. See SBA 7(a) loans. Do not start a 5-year unsecured note the week before a takeout that would have paid the MCA anyway.
Worked example: contractor, two advances, one payroll
A remodeler funded $80,000 at 1.38 in March and $55,000 at 1.45 in June. Combined remaining payoff in August is $118,000. Combined weekly drafts are running about $5,400. Crew payroll cannot slip a week without losing carpenters to a competitor.
A $120,000 5-year unsecured term loan at an illustrative 13.5% is about $2,760 a month — roughly $635 a week. The job is not to make the company cheap to finance. The job is to make Friday payroll a known number so the company can finish the jobs that repay everyone.
If the remodeler also has a flip in process, keep stacks separate: fix and flip on the property, unsecured on the operating bleed. Do not raid rehab draws to service MCA drafts. That is how projects stall and both lenders get a problem file.
Worked example: restaurant, factor vs covers
A 70-seat independent does $85,000 a month in sales. An MCA funded $90,000 at 1.40. Drafts are taking a little over $4,000 a week. Prime cost was already 64%. After the draft, there is not enough left for a competent Saturday line cook.
Refinancing the remaining $70,000 (not the original $90,000) into a 5-year note at an illustrative 12.5% is about $1,575 a month. That is still debt. It is debt a weekly P&L can see. The restaurant page covers buildout and payroll uses; this page is only the MCA math.
Unsecured term loan payment vs merchant cash advance. Estimates only — not a loan offer.
Monthly payment
—
Fully amortizing
Total interest
—
Over the full term
Total repaid
—
Principal + interest
Effective cost
—
Interest ÷ principal
Program checklist
Term loan vs merchant cash advance
| Term loan | MCA | |
|---|---|---|
| Amount funded | — | — |
| Estimated monthly outflow | — | — |
| Total extra cost | — | — |
Documents that make payoff smooth
Ask the MCA provider for a written payoff dated through a funding window, not a verbal “around $X.” You need:
- Remaining purchased amount / payoff figure
- Wire instructions
- Confirmation that daily drafts stop on a stated date after receipt
- Any UCC-1 filing number so a release can be confirmed later
- The original factor agreement so use-of-funds on the new loan is “payoff of existing receivable purchase,” not vague working capital
The unsecured application still wants two years of tax returns and a FICO 8. There is no published score floor on this site. Pricing moves with the file.
How this sits next to Jaken Finance Group property programs
| Need | Product |
|---|---|
| Stop MCA drafts | This page — unsecured term refinance |
| Close a flip or bridge | Hard money at 8.99%–13.5% |
| Long-term rental | DSCR at 5.75%–10.5% |
| Pull rental equity, keep the first | Second-position DSCR |
| Buy the restaurant or the building | SBA restaurant or commercial financing |
| Truck or hood system on an invoice | Equipment financing at 6%–14% |
Do not mix rate tables. Unsecured 6%–18% is not hard money and not DSCR.
How to apply
- Get a dated MCA payoff.
- Run remaining balance through the calculator. If extra cost does not drop, do not refinance.
- Submit the unsecured financing form.
- If a property close is also in motion, submit the real estate file to Jaken Finance Group in parallel.
Pre-qualify to refinance an MCA · Unsecured term loan overview · (833) 264-7776
Sources
- FTC — small business financing staff perspective
- FTC — merchant cash advance enforcement example
- SBA — loan programs
Calculator outputs are estimates, not a payoff quote or a loan offer. MCA payoff figures come from the current provider. Unsecured pre-qualification is a Preferred Funding Group referral. Jaken Finance Group originates non-owner-occupied investment property loans only.