Important: Business loans — including those used to refinance a merchant cash advance — are regulated by the FCA. LoanLens provides information only and does not arrange loans. Any broker we refer you to will be FCA-authorised. If you are in financial difficulty, contact Business Debtline on 0800 197 6026 for free, independent advice.
How to Get Out of a Merchant Cash Advance
Merchant cash advances can feel like a trap. The repayments come out every day, the effective rate is eye-watering, and if business slows down even slightly, things get very tight very quickly. You are not stuck. There are real options — and this guide walks through all of them honestly.
By Daniel · Last updated 10 April 2026
Key takeaways
- →MCAs charge a factor rate — not interest — so early repayment usually costs the full agreed amount, not a reduced figure.
- →The five main exit options are: term loan refinance, debt consolidation, revenue-based refinancing, negotiation, and insolvency advice.
- →Stacking (taking a second MCA while still repaying the first) is one of the fastest routes to financial difficulty — avoid it.
- →If you are genuinely struggling, Business Debtline (0800 197 6026) offers free advice before things get worse.
First: why MCAs feel expensive (and are)
A merchant cash advance is not technically a loan. The provider buys a portion of your future card takings at a discount. You receive a lump sum now; they take a fixed percentage of your daily card revenue until they have received the agreed total back.
The cost is expressed as a factor rate. A factor rate of 1.3 means you repay £1.30 for every £1.00 advanced. That sounds manageable until you work out the APR equivalent.
Example: the real cost of a 1.3 factor rate
Amount advanced
£20,000
Total repayment
£26,000
Factor rate 1.3 × £20k
Effective APR
~60–90%+
Depending on repayment speed
The faster your card takings, the faster you repay — and the higher your effective APR becomes. A 12-month repayment at factor rate 1.3 equates to roughly 60% APR. If it repays in 6 months, the APR is closer to 120%.
That is not a dig at MCA providers — for some businesses in a short-term pinch with strong card revenue, an MCA can be the right tool. But if you have had one for a while and the cost is hurting your business, it is worth knowing your options.
Warning: MCA stacking
MCA stacking is when a business takes a second or third MCA while still repaying the first. It is more common than you might think — providers actively market new advances to existing customers.
The problem: each MCA takes a percentage of daily card revenue. Two or three running simultaneously can drain 30–50% or more of your card takings every single day, leaving too little to cover rent, wages, and stock. If you are in this situation, skip to Option 5 below.
Your five options
Refinance with a business term loan
The most straightforward exit: take a fixed-rate business term loan and use it to settle the MCA in full. You replace a high-cost, variable daily repayment with a predictable monthly payment at a much lower rate.
Works well when:
- ✓Your credit score is reasonable (550+)
- ✓Business has been trading 12+ months
- ✓You have evidence of revenue
Typical cost:
12–25% APR unsecured, 8–14% APR secured. Much less than your MCA effective rate in most cases.
Business debt consolidation loan
If you have other business debt alongside the MCA — term loans, credit cards, overdrafts — a consolidation loan wraps everything into one. You get one monthly payment, one lender, and (usually) a lower total outgoing each month.
MCAs can typically be included in a consolidation loan. The lender pays off each of your existing facilities at settlement, and you then repay the consolidation loan over an agreed term (usually 2–5 years).
Use our consolidation calculator to estimate what a single loan could cost versus your current combined payments.
Revenue-based refinancing
Some specialist lenders offer revenue-based finance — structurally similar to an MCA (repayments come from a percentage of your daily card takings), but at significantly lower factor rates (typically 1.1–1.2 versus 1.25–1.5+ for MCA providers). You are still repaying from revenue rather than a fixed monthly amount, but the total cost is substantially less.
This option works best when your credit profile makes a standard term loan difficult, or where you need a fast decision. A factor rate of 1.1 on a £20,000 advance means repaying £22,000 total — compared to £26,000–£30,000 on a typical MCA at 1.3–1.5.
Negotiate directly with your MCA provider
This is underused and worth trying before anything else. If your card revenue has dropped significantly and you are struggling to keep up, some MCA providers will agree to temporarily reduce the percentage taken from daily takings, extend the repayment period, or accept a discounted settlement if you can pay a lump sum.
They would rather negotiate than have you go insolvent. It does not always work, but it costs nothing to ask and can buy you time while you arrange refinancing.
Put everything in writing. Any change to your agreement should be confirmed by email or letter — not just a phone conversation.
Get independent advice — urgently if needed
If you have multiple MCAs, are struggling to meet other bills, or your card takings have dropped to the point where daily repayments are taking more than you can sustain — do not wait. Get advice now.
Free, independent help:
- Business Debtline — 0800 197 6026 (free, confidential, run by Money Advice Trust). They can help you understand your options including restructuring, informal arrangements with creditors, and insolvency if it comes to that.
- ICAEW Licensed Insolvency Practitioners — if insolvency is a possibility, always use a licensed practitioner. Check credentials at icaew.com.
Worked example: MCA vs term loan refinance
A builder with a £25,000 MCA at factor rate 1.3
Current MCA cost
- Amount advanced: £25,000
- Factor rate: 1.3
- Total to repay: £32,500
- Daily deductions: ~£108/day (10% of ~£1,080/day card revenue)
- Repaid in: ~10 months
- Effective APR: ~65%
After refinancing with a term loan
- Loan amount: £25,000
- Rate: 18% APR unsecured
- Term: 2 years
- Monthly payment: £1,247
- Total repaid: £29,928
- Saving vs MCA: £2,572
Even at 18% APR — which is not a cheap loan — the term loan costs £2,572 less in total than the MCA, and gives you a predictable fixed monthly payment instead of daily deductions from card revenue.
Which option is right for you?
| Your situation | Most likely best option |
|---|---|
| One MCA, decent credit, 12+ months trading | Term loan refinance (Option 1) |
| MCA plus other business debt | Debt consolidation loan (Option 2) |
| Poor credit, still generating revenue | Revenue-based refinancing or negotiation (Options 3–4) |
| Recently struggling, want to try the easy route first | Negotiate with provider (Option 4) |
| Multiple MCAs, daily repayments unsustainable | Business Debtline urgently (Option 5) |
Frequently asked questions
Can you pay off a merchant cash advance early?
It depends on your agreement. Some MCAs let you settle early at the full agreed repayment amount (not a reduced figure) because the factor rate is applied upfront. Others are more flexible. Check your contract or ask your provider directly — the answer should be in the settlement section.
What is MCA stacking and why is it dangerous?
MCA stacking is when a business takes a second (or third) merchant cash advance while still repaying the first. Each advance takes a percentage of daily card takings, so multiple MCAs can drain so much revenue that the business cannot cover basic costs. Stacking is a common route into financial difficulty.
What is the typical cost of a merchant cash advance?
MCAs use a factor rate rather than an interest rate. A typical factor rate of 1.3 means you repay £13,000 for every £10,000 advanced. Expressed as an APR this can be 40-150%+ depending on how quickly repayments are taken. The shorter the repayment period, the higher the effective annual rate.
Are merchant cash advances regulated in the UK?
Merchant cash advances are not currently regulated by the FCA in the same way as consumer credit. They are structured as a purchase of future receivables rather than a loan. This means you have fewer formal protections than with a regulated loan, though you can still complain to your provider and seek independent advice.
Can I consolidate a merchant cash advance with other business loans?
Yes — an MCA can typically be included in a business debt consolidation loan alongside term loans, overdrafts, and credit facilities. The key is getting a term loan with a lower effective rate than the MCA. A broker who specialises in business debt consolidation can assess whether this makes financial sense for your situation.
Related guides
What Is Business Debt Consolidation?
How it works, what it costs, and who it suits
What Does Consolidation Actually Cost?
Rates, arrangement fees, and ERCs explained
My Business Has Too Many Loans
All four options, including when consolidation makes sense
Consolidation Calculator
See what a single loan could cost per month
Talk to a specialist broker about your options
We'll connect you with FCA-authorised commercial finance brokers who work with businesses refinancing merchant cash advances and consolidating business debt.
Disclaimer: LoanLens provides information and educational content only. We do not provide financial advice and we do not arrange loans. Business loans are regulated by the Financial Conduct Authority (FCA). Always use an FCA-authorised broker. If you are in financial difficulty, contact Business Debtline (0800 197 6026) for free, independent advice.