Abstract Capital Does
Abstract Capital Group – offers reverse consolidation. A reverse consolidation funder will provide the business with a loan in exchange of taking on the daily or weekly payments incurred from the merchant cash advance.
How Does Reverse Consolidation Work?
By extending the loan repayment term, a reverse consolidation lender provides a business with more breathing room. This is especially useful if cash flow is tight or credit sales aren’t performing as well as expected. By taking out a reverse consolidation, it can typically lower payments by 40% to 60%.
This means there’s higher net cash within the business because of the lower payments. It’s also a good way to consolidate multiple cash advances. The easiest way to think of a reverse consolidation on a merchant cash advance is that it turns the loan into a larger loan with a longer repayment period with small repayment amounts.
Benefits of Reverse Consolidation
Reduce Weekly Payments
Reverse consolidation lowers the amount of the weekly repayment that a business owes as the reverse consolidation lender and then takes on the debt to pay back the MCA lender.
More access to cash
If your business has multiple MCAs to pay back on a daily or weekly basis, then it can become limited in terms of cash on hand. Since the reverse consolidation lender will infuse the funds to pay back MCA lenders, the business is able to have more cash on hand. It will turn the multiple repayments owed into one sum that will then be owed back to the reverse consolidation lender.
With reverse consolidation options, businesses have an opportunity to receive more capital funding for the time being until the situation evolves and they can qualify for betting financing options.
Frequently Asked Questions
Every type of business, whether small or large, needs financial help at one time or another to boost its working capital. While it is easy for large and established companies to obtain a loan from leading financiers, small companies do not have this privilege. Only a few small businesses get to have their loans approved from top lenders in the financial markets.
For that reason, small businesses have to seek alternative funding methods. In the end, they are left with multiple cash advances to manage. This is where reverse consolidation comes in; to help these small businesses manage the small loans and work their way out of debt.
If a business has three cash advances with an obligation to make payments at least five days a week, this business may not be able to achieve much with the little income it is making every day. Reverse consolidation can be of great help to such a business by replacing the several weekly obligations to just one replacement amount, paid to the consolidation lender. With that, the business ends up spending less every day since it is no longer making everyday payments, which is now the responsibility of the reverse consolidation.
This is the best option for a business that feels overextended with small cash advances. Reverse consolidation will even allow such a business to get some additional cash, though not as much as a business can get from a traditional replacement loan. Even so, a business stands to save much money since they do not have to deal with the expensive, multiple daily payments. Again, small businesses have a better option and do not have to renew numerous cash advances that keep increases the amount of debt they have.
In a nutshell, reverse consolidation will do the following:
- Its funder will deposit money into your bank account to take care of all your cash advance payments the business has to make for that week
- The business will only need to make a single payment every week to the reverse consolidation financier, which is just a portion of what the company pays at the moment for its cash advances
- The length of time the business has to repay the money loaned by the reverse consolidation funder is longer when compared to the repayment term given by cash advance lenders. This means that the business can pay back the reverse consolidation funder after all the cash advances have been paid.
A business that has several small advances to repay has to make small payments daily or weekly to ensure that its debts are paid back on time and in full. With that, a business is left financially struggling since much of the profits it makes daily has to be used to repay the advances. Reverse consolidation helps to reduce the amount of money the business has to spend weekly. Thus, the business is left with some of its profits for advancements and to cater for its other needs. When you decide to go for reverse consolidation, your business will only be required to make a single payment, which is way less than it was paying in cash advances weekly.
A reverse consolidation funder will provide you with what you need every week to make the loan repayment for your cash advances with no struggle. The financier can give you all the money you need to get out of debt as quickly as you want to. This way, you will only be left with one loan to pay, which is manageable.