There are three routes out of MCA debt, each suiting different circumstances: refinancing, restructuring, and settlement. They differ on speed, cost, credit impact, eligibility, and obligations, and the right one depends on your situation. This guide explains what each path involves. To work out which best fits your business, see our MCA Debt Relief Decision Guide.
At a Glance: The Three MCA Debt Relief Paths Compared
| Refinancing | Restructuring | Settlement | |
|---|---|---|---|
| Speed | Depends on bank underwriting and is assessed against the lender’s timeline. | Negotiations can begin quickly once you enroll. | Usually slowest, as it typically follows a period of non-payment. |
| Cost | Interest on a conventional loan is spread across monthly payments. | Renegotiated terms, with fees set out in writing beforehand. | A reduced lump sum, though the route there carries costs that the headline figure doesn’t show. |
| Credit impact | Involves a credit assessment; the new facility is reported as conventional business credit. | The agreement remains current, and MCAs are generally credit neutral. | The non-payment period beforehand can expose you to judgments and liens, which are public records. |
| Eligibility | Depends on revenue consistency, credit profile, and number of positions. | Available in a wider range of circumstances, including where refinancing isn’t. | Generally, only in play once payments have stopped or are close to stopping. |
| Obligations | One monthly loan repayment, replacing daily or weekly withdrawals. | Renegotiated payments continue at a reduced level. | A lump sum, which requires available funds. |
What MCA Debt Refinancing Means
Refinancing replaces your existing advances with a single, conventional facility, in most cases, a Term Loan or Line of Credit from an FDIC-insured bank. The MCAs are paid off, and what remains is one monthly repayment at an interest rate rather than a factor rate.
This is usually the first route to check, because it removes the MCA structure entirely rather than renegotiating within it. Daily withdrawals stop, and you’re dealing with a regulated bank rather than a funder. Early repayment also starts saving you money, as interest accrues over time in the way a fixed factor rate doesn’t. Where a business qualifies, repayments typically fall by 65-85%.
For most businesses, qualifying is the obstacle. A bank underwriting a conventional loan wants steady, verifiable revenue, a credit profile it’s comfortable lending against, and a total debt position small enough that one new facility can actually clear it. Several stacked advances or a revenue trend heading the wrong way will usually put refinancing out of reach for now.
Related Reading: Why VCF Tries Refinancing First and Are You Eligible to Refinance Your MCA Debt?
What MCA Debt Restructuring Means
Restructuring renegotiates the terms of the advances you already have, rather than replacing them. Attorneys negotiate directly with your funders to reduce the repayment burden, and the existing agreements remain in force throughout the process. Clients typically see repayments reduced by 60-70%.
What separates restructuring from settlement is that nothing has to go wrong first. The business continues to meet its obligations while the terms are renegotiated, so the enforcement provisions in the purchase agreement, such as a Confession of Judgment, never come into play. It also reaches situations where refinancing can’t, including several stacked positions or a business already under legal pressure from a funder.
Related Reading: Benefits of Attorney-Led Restructuring
What MCA Debt Settlement Means
Settlement can be appealing as you clear the debt for less than you owe. However, it’s a lump sum, and a business under enough pressure to consider settlement often doesn’t have that money available.
A funder receiving full payments on schedule has little reason to accept less, so settlement usually only becomes viable once payments have stopped or are about to. The problem is that stopping payments also allows a funder to act under the purchase agreement’s provisions, which may include filing a Confession of Judgment, registering a UCC lien against the business’s assets, or pursuing a judgment in court. Judgments are matters of public record, and a lien can block other financing while it remains in effect.
None of this makes debt settlement wrong. It’s a specific tool for a specific position: a lower balance, bought with a period of exposure.
Three Scenarios
A business with two advances, current on payments, and stable revenue. Nothing has gone wrong yet, which keeps the most options open. Refinancing is the first thing to assess, because the business still looks like a conventional lending proposition. Waiting until the payments slip would narrow the field considerably.
A business with four stacked advances that’s starting to fall behind. The combined daily withdrawals are the problem, not any single balance, and the stacking, plus the missed payments, make a bank facility unlikely for now. Restructuring addresses the existing agreements directly and keeps the business current while terms are renegotiated.
A business already in default, with a judgment filed. The situation has escalated past what refinancing can reach, and the priority shifts from reducing payments to limiting exposure, meaning protecting bank accounts and assets from enforcement action already underway. This is where attorney-led negotiation matters most, and where settlement may enter the conversation as part of that negotiation rather than as a route chosen upfront.
How You’ll Know Which One Applies
You don’t have to work this out alone or take anyone’s word for it on a phone call. With Value Capital Funding, if refinancing isn’t currently possible, you receive a written analysis setting out why, based on your actual figures rather than a general rule. It covers what’s putting refinancing out of reach right now, what would need to change for it to become available later, and what restructuring would do for your payments in the meantime.
The honest answer is that it depends on numbers: how many advances you’re carrying, whether you’re current on payments, and what your revenue looks like. There’s a meaningful difference between getting more funding and getting out of debt, and the three paths above are all firmly in the second category.
Our MCA Debt Relief Decision Guide walks through those three factors, and the MCA Debt Calculator gives you an estimate based on your actual balances.
If you’d like advice tailored to your specific situation, our team is here to talk it through at no cost and with no obligation.
FAQs
Yes. A business that doesn’t qualify for refinancing today may qualify later once revenue stabilizes, and a situation that escalates can shift the appropriate route in the other direction. Your circumstances at the time determine what’s realistic.
MCAs themselves are generally credit neutral, since they aren’t structured as loans and mostly don’t report to the credit bureaus. Refinancing involves a credit assessment, and the new facility reports as conventional business credit. Restructuring keeps agreements current. The risk lies in non-payment, which can lead to judgments and liens that are public record and visible to future lenders.
Because the balance is only part of the picture. Reaching a settlement usually means stopping payments first, which exposes the business to enforcement action, and settling requires a lump sum that the business must have available.
Most businesses that come to us hoping to refinance don’t qualify straight away, and it’s better to know that upfront than to discover it later. After your free consultation with Value Capital Funding, you’ll get a written analysis explaining where your figures fall short and what would need to change for refinancing to become possible. Not qualifying today doesn’t mean not qualifying permanently.
Consolidation combines multiple advances into a single repayment, simplifying matters without necessarily reducing the total cost. It’s worth distinguishing from reverse consolidation, a new advance taken to cover existing payments, which can increase total debt.
Related Reading: MCA Glossary
