Why More Businesses Are Struggling to Exit MCA Debt

a man sitting at a desk with a laptop and papers
a man sitting at a desk with a laptop and papers

Beginning in mid-2025, many businesses seeking to refinance Merchant Cash Advance (MCA) obligations into longer-term conventional financing began encountering a more difficult lending environment.

For years, many operators used short-term capital as a bridge strategy: access fast funding, stabilize or grow the business, then eventually refinance into lower-cost, longer-duration financing such as SBA or conventional term debt.

In many cases, that approach worked. But following changes to SBA Standard Operating Procedures (SOPs) and evolving lender underwriting standards, refinancing pathways for certain short-term debt structures became more restrictive.

As a result, many businesses now find themselves in an increasingly difficult position:
generating revenue, remaining operationally viable, yet struggling under aggressive payment structures that continuously pressure working capital.

The Problem Often Is Not Revenue

One of the biggest misconceptions surrounding MCA debt is that businesses experiencing payment pressure are failing operationally.

In reality, many companies facing liquidity stress are still producing meaningful revenue. The issue is often the structure and frequency of repayment obligations.

Daily and weekly ACH withdrawals can significantly compress operating cash flow by removing liquidity before revenue has time to properly cycle back through the business.

Over time, this can create:

  • payroll pressure,

  • vendor delays,

  • inventory constraints,

  • reduced operating reserves,

  • and increasing dependence on additional short-term financing.


In many situations, the underlying business remains viable. The financing structure becomes the destabilizing factor.

Why Refinancing Became More Challenging

As underwriting standards tightened, lenders began scrutinizing refinancing scenarios more carefully depending on:

  • existing debt composition,

  • repayment history,

  • leverage exposure,

  • business seasoning,

  • ownership structure,

  • and use of proceeds.

This has been particularly challenging for:

  • businesses under two years old,

  • heavily leveraged operators,

  • companies with stacked MCA positions,

  • and borrowers seeking immediate stabilization financing.

Many businesses that previously expected to transition into SBA or conventional structures are now discovering that refinancing eligibility is no longer as straightforward as it once was.

Payment Frequency Creates Operational Pressure

While cost of capital is important, payment frequency is often the more immediate operational issue.

High-frequency withdrawals can quietly reduce flexibility across the business by continuously draining liquidity throughout the month.

Even businesses experiencing revenue growth may encounter:

  • declining average balances,

  • tighter vendor cycles,

  • delayed reinvestment,

  • and increasing working capital strain.

This is why many operators describe feeling “cash poor” despite maintaining sales activity.

Can MCA Debt Still Be Refinanced?

In some cases, yes.

Depending on the company’s:

  • revenue consistency,

  • cash flow trends,

  • debt exposure,

  • average balances,

  • and overall operational profile,

  • certain restructuring or payment stabilization strategies may still be available.

Potential approaches can include:

  • structured consolidation,

  • longer-duration payment structures,

  • operational refinancing,

  • and transitional working capital strategies designed to improve liquidity management.

Every situation is different, which is why detailed cash flow analysis remains critical.

Final Thoughts

Many businesses seeking relief from MCA pressure are immediately pushed into additional short-term financing without a broader analysis of their overall capital structure.

At Business Debt Refi, we take a more strategic approach.

For example, we recently worked with a business carrying three separate MCA positions that did not currently qualify for SBA refinancing. Rather than immediately placing additional short-term debt, we analyzed the company’s complete financial picture, including existing obligations, cash flow trends, assets, and projected operational performance.

Based on that analysis, we identified a bridge financing structure designed to stabilize working capital and reduce payment pressure while positioning the business toward future SBA eligibility.

By evaluating the company’s projected post-stabilization debt service coverage and overall liquidity profile, we were able to guide the borrower toward a financing structure aligned with both immediate operational needs and longer-term refinancing objectives.

This type of analysis-driven approach differs significantly from the common “spray and pray” model where businesses are simply circulated through multiple lenders without a clear long-term strategy.