Merchant Cash Advance Loans are now Ineligible for SBA Refinancing Loans
Merchant Cash Advance Loans are now Ineligible for SBA Refinancing Loans
The SBA’s updated rules in SOP 50 10 8 (effective June 1, 2025) ban refinancing MCAs with 7(a) or 504 loans. Merchant loans offer quick cash at brutal rates of 20%–150%+. They’re a cash flow nightmare, and the SBA’s ban on refinancing them reflects its focus on long-term, low-risk loans.
Why Advisors and MCAs Don’t Mix
Most advisors shun MCAs, wary of their predatory terms, and rightly so—you’re held to a higher standard in choosing financial tools. Lenders know advisors face cash flow pressures like other small businesses and get swamped with “easy money” MCA pitches, but they’re puzzled when advisors opt for these high-rate, short-term loans. At AdvisorLoans, we’ve refinanced MCAs before as part of broader deals to clear liens, bundling them with debt restructuring. The SBA’s ban now requires a conventional loan to do this, and while not a deal-breaker, bankers struggle to square advisors’ expertise with such choices. We advocate for you, connecting with lenders who get your challenges.
Why the SBA Bans MCA Refinancing
Predatory Terms: MCAs’ sky-high rates (20%–150%+) and aggressive repayments dwarf SBA rates, seen as exploitative and harmful to your practice’s growth.
High Lender Risk: Short terms (3–18 months) and high default rates make MCAs unstable, clashing with the SBA’s secure, government-backed loans.
Program Integrity: Allowing MCA refinancing could tempt advisors to take risky loans expecting SBA relief, undermining the 7(a) program’s mission.
As a financial advisor, grappling with the punishing payments of a merchant cash advance (MCA) can feel like a betrayal of your expertise. You might’ve considered an SBA loan to refinance that high-cost debt and regain control of your practice’s finances. Unfortunately, the SBA’s updated rules explicitly prohibit refinancing MCAs with 7(a) or 504 loans.
AdvisorLoans is Ready to Help
Need working capital or a credit line? We deliver independent lending advice we believe serves the best interests of the advisors we work with. Our consulting is relaxed, unbiased, and straight-up candid. We’ll give you an instant read on your loan request’s viability, highlight any workarounds or red flags, and ensure the loan aligns with your strategic goals or future financing plans. We can help you compare SBA and conventional options, address equity injections, and share the best solution for your goals.