A merchant cash advance renewal is a new advance that pays off the remaining balance of your current one. You receive the difference, called net funding, and move to a single new payment. You can apply to renew once you've paid in 60% of your current advance, as long as it's performing well. Each renewal is underwritten fresh, on your current deposits.
When can I renew a merchant cash advance?
Once you've paid in 60% of your current advance, meaning 60% of the purchased amount has been delivered, you can apply to renew. Two things matter beyond that milestone: your advance has a solid payment history, and your business could use more capital than the remaining balance would free up.
The earlier you renew, the more of the new funding goes to settling the old balance and the less reaches your account. If you're only a short way into an advance and need capital now, a second-position advance may be the closer fit. An underwriter can show you how each option would look.
How a renewal works
- You apply again. A fresh application, plus your latest three months of business bank statements and month-to-date (four months for California businesses).
- We confirm the remaining balance. The amount still to be delivered on the current advance, usually confirmed with a payoff letter.
- You get an offer. It shows the new funded amount, how much of it settles the old balance, the net funding you'll receive, the new purchased amount (your hard stop number) and the new payment.
- The old advance is settled. At funding, the remaining balance is paid from the new advance, and the old payment stops.
- One payment going forward. You make a single daily or weekly payment on the new advance until its purchased amount is delivered.
Hypothetical example. A business has $40,000 left to deliver on its current advance and renews with a new funded amount of $150,000 at a factor rate of 1.35. The new purchased amount is $202,500. From the $150,000, $40,000 settles the old balance, so about $110,000 reaches the business (less any fees stated in the offer). These are illustrative numbers, not an offer.
What we look at for a renewal
A renewal isn't automatic. It's a new advance, so we underwrite it on where your business is now, not where it was when you were first funded.
- Payment history on the current advance: steady payments, and how the account handled them.
- Current deposits compared with when you were first funded. Growth helps; a decline needs explaining.
- Daily balances and negative days over the most recent months.
- Any other advances the business has taken since, and what they collect.
- The baseline requirements: 12 months+ in business, $50,000+ in average monthly deposits, a credit score of 500 or higher. See all the requirements.
Honest cautions before you renew
- You pay a factor on the whole new funded amount. That includes the part that settles your old balance. Look at net funding against the new purchased amount, not only at the headline figure.
- Renewing early is the most expensive way to renew. The less you've delivered, the more of the new advance goes to the old one.
- A renewal is a fresh commitment. The new term starts over, up to 10 months. Make sure the extra capital is for something that earns it back.
- Don't renew just to keep up. If you need new money mainly to cover payments, a renewal postpones the problem. Talk to us about reconciliation instead.
If you'd rather finish the current advance, that's a perfectly good choice. Early payoff discounts are available case by case; see paying off an MCA early.
Frequently asked questions
What is net funding on a renewal?
Net funding is the money that actually reaches your account. On a renewal, part of the new funded amount settles the remaining balance of your current advance, and any fees stated in the offer are deducted. What's left is your net funding. Your offer lists each of these figures before you sign.
How soon can I renew my merchant cash advance?
Once you've paid in 60% of your current advance, with a solid payment history. By then most of the purchased amount has been delivered, so more of the new funding reaches your account instead of settling the old balance.
If I've paid on time, will my renewal be approved?
No. On-time payments help a great deal, but every renewal is a new advance underwritten on your current deposits, balances, other advances and credit. If your business has grown, a renewal may be larger than the first advance; if revenue has dropped, it may be smaller.
Should I renew or take a second position?
A renewal settles the current advance and leaves one payment. A second position keeps the current advance running and adds a second payment. Renewals tend to suit businesses well into an advance; second positions tend to suit businesses early in one. Ask to see both side by side.
Do I need to send new bank statements?
Yes. A renewal is underwritten on your latest three months of business bank statements plus month-to-date (four months for California businesses), along with a signed application. Include every associated business and business bank account.