Same money. Completely different business. We refinance merchant cash advances and expensive short-term notes into one conventional term loan, with up to 25 years to repay, monthly payments, and no balloon at the end.
A business takes an advance to get through a slow stretch. The money lands in two days, and then the debits start, daily or weekly, whether or not the week was any good. Take a second position to service the first and it compounds. By the time most owners call us they are carrying three or four, and every Monday is a cash flow emergency.
A factor rate is not an interest rate and cannot be compared to one. Here is the arithmetic with every number shown, so you can run it against your own paperwork.
$50,000 funded at a 1.35 factor rate, repaid by business-day debits over nine months.
The gap between 35 percent and 84 percent is the part nobody explains. You never hold the full $50,000 for the full nine months. The debits start the next business day and never stop, so the balance you actually have use of averages a little over half the amount funded. Paying $17,500 to use roughly $25,000 for nine months is an eighty-something percent rate, and that is before origination, ACH or underwriting fees, which push it higher still.
Nothing changes here except how fast the money comes back.
Two funders quote you the identical 1.35 and one of them is twice the price of the other. The term is the price. If a renewal offer holds the factor rate but shortens the term, that is a rate increase however it is presented to you.
Three advances taken over several months, which is the file we see most often.
That is $25,096 a month leaving the account before rent, payroll, fuel or inventory. It is why the third advance gets taken to service the first two, and why the fourth one is usually the end.
The same $154,450 of debt, refinanced today into one conventional term loan at 12 percent over ten years.
The honest part: $111,459 of interest over ten years is more absolute dollars than the $44,450 the advances were going to cost, because you are borrowing for ten years instead of six months. Anyone selling you a takeout who does not say that is not being straight with you. What the loan buys is the $22,880 a month that stops leaving the account and a payment the business can actually carry. If the daily debits are the reason you cannot make payroll, buy inventory or bid the next job, that trade is usually worth making. If you can clear the advances out of cash flow in the next sixty days, it is not.
Illustration only, not an offer of credit. Business days figured at 21 per month. Equivalent annual rates are the nominal annualized rate on the actual debit schedule, calculated against the amount funded, and exclude origination, ACH, underwriting and default fees. Your own numbers will differ. NTIB Finance and Consulting does not originate merchant cash advances.
Most owners are told to try an SBA loan first. Here is what they discover: SBA rules do not permit refinancing merchant cash advance debt. The businesses that most need a way out are locked out of the door everyone points them to. The program we place is a conventional term loan, so it can do what SBA cannot.
A short call and your current debt schedule. We will tell you straight whether there is a path.
We prepare the file the way lenders expect it, which is usually the difference between an approval and a decline.
You see the structure, rate and payment before anything is committed.
The lender retires the advances at closing. The daily debits stop. You make one monthly payment.
Generally no. SBA rules do not permit refinancing merchant cash advance debt. That is why the bank and the SBA shop both said no, and it is not a reflection on your business. The program we place is conventional, so the restriction does not apply.
No. Stacked positions are the normal condition on these files. All of them consolidate into the single loan at closing.
The 25-year program starts at $500,000 of total financing. If you are carrying less, call anyway. Programs change, and there is sometimes another route depending on the size and shape of the debt.
Faster than SBA, slower than an advance. It is a real underwritten loan, and the honest answer is that speed depends on how quickly you can produce financials and a debt schedule. Owners who move fast on documents close fast.
No, and we will not pretend otherwise. Lenders look at cash flow, time in business, and the overall debt picture. The first conversation is free, and if there is no path we will tell you that too, and why.
We earn a broker fee at closing, disclosed upfront and built into the financing structure. The initial consultation is free.
No. A factor rate is a multiplier on the amount funded, not a rate charged on a declining balance. To convert it: multiply the amount funded by the factor rate to get the total payback, subtract the funded amount to get the cost, divide the payback by the number of debits to get each payment, then find the rate that makes that stream of payments equal what you received. The shortcut that gets you close enough to make a decision is to take the cost as a percentage of the funded amount, roughly double it because you only have use of about half the money on average, then scale it to twelve months. A 1.35 factor is a 35 percent cost, and repaid over nine business-day months it works out to about 84 percent a year.
Because the term is doing the pricing, not the factor rate. A 1.35 factor repaid over twelve months is about 63 percent a year. The same 1.35 repaid over six months is about 126 percent. Identical quoted number, double the cost. When you compare offers, compare the daily or weekly debit and the number of payments, not the factor rate.
In absolute dollars, usually yes, and anyone who tells you otherwise is selling. On the stack shown above, the advances cost $44,450 and ten years of interest at 12 percent comes to about $111,459. You are borrowing for ten years instead of six months. What the refinance buys is not a smaller total, it is a payment the business can survive: roughly $2,216 a month instead of about $25,096. If the debits are the reason you cannot make payroll or buy inventory, that is a trade worth making. If you can clear the advances out of cash flow within sixty days, it is not.
Sometimes. Some funders publish an early payoff discount, some will negotiate one when a payoff letter is requested, and some contracts state the full payback is owed no matter when it is repaid. It is written into your agreement, so read the payoff clause rather than assuming either way. Before any takeout is structured, ask every funder for a written payoff letter with a good-through date. If there is a discount, it changes how much actually needs to be borrowed.
Send us your debt schedule and we will give you a straight answer. If the debits are the reason payroll is tight every month, that is a fixable problem.
Every file is underwritten and not every business qualifies. NTIB Finance & Consulting is a commercial finance broker; loans are made by third-party lenders. Terms, rates and structures vary by lender and file.