You don’t refinance to feel better. You refinance to pay less and breathe easier. This is the straight path to cheaper money (banks) and the best non-bank alternatives when timing or qualifications get in the way.
1) Bank money: when it’s realistic and why it’s worth it
Blunt rule: banks lend you all the money you want when you don’t need it. If you can genuinely wait and your file looks clean, bank pricing crushes fintech.
What “ready” looks like (quick checklist):
- Profitability & cushion: DSCR ≥ 1.25x on realistic numbers (no fairy-tale projections).
- Clean deposits: few/no NSFs or negative days in the last 60–90.
- Tax compliance: returns filed, no past-due balances.
- UCC picture: incumbents paid off, UCC-3 termination queued; no mystery liens.
- Personal credit (guarantor): generally 680+ helps for speed.
- Financials: last 2 years biz returns, YTD P&L & balance sheet that actually reconcile.
Payment reality (why banks win):
$200,000 amortizing bank loan at ~11% APR, 60 months → about $4,350/month.
Compare that to a typical fintech structure with weekly debits that can run five figures a month. The spread isn’t subtle.
SBA caveat: current interpretations indicate SBA programs generally do not allow refinancing MCA-style debt. Policies evolve; verify the latest SOP before you bank on SBA for an MCA refi.
Timeline: think 30–90 days (faster if you’re squeaky clean and working with a responsive banker). If you’re gasping for cash in two weeks, this isn’t your lane today.
2) Consolidation (banks) vs “consolidation” (brokers)
- Bank consolidation: pay off multiple positions, roll into one obligation, often with a longer term and far lower periodic payment. New cash-out optional. This can be a lifeline.
- Broker “consolidation”: if liens aren’t released and debits don’t go away, it’s not consolidation; it’s a stack with a new logo. Hard pass.
Gotchas to clear for banks:
- The MCA likely filed a blanket UCC (including receivables). You need a payoff + UCC-3 or a formal subordination (rare).
- Expect questions about use of funds, AR aging, and debt schedule. Show you understand your numbers.
3) If bank timing/fit isn’t there: best non-bank alternatives
A) Factoring / AR line (for B2B invoices)
Use when: cash crunch is caused by slow-paying receivables.
Why it works: advances against invoices; funding grows with AR, not just deposits.
Trade-offs: fees vary; customer notification is common; there’s underwriting on debtors, not just you.
Watch out: your current MCA’s blanket lien probably covers receivables—get payoff/UCC-3 or a subordination (rare) before you move.
Upside: when AR is the bottleneck, factoring is often cheaper and cleaner than slapping on another daily debit.
B) Revenue-based line of credit
Use when: you’re reasonably healthy and want a revolving option (pull only what you need).
Why it works: flexible, typically auto-draw/repay from your revenue; can be less punishing than a fixed daily debt.
Trade-offs: pricing > banks; limits tied to revenue; must keep deposits clean.
C) Equipment financing (for equipment—shocking, we know)
Use when: the spend is actual equipment.
Why it works: the lender takes a first lien on the equipment, leaving working-capital lines less encumbered.
Well-qualified: consider bank/SBA equipment loans (if policy allows for your use case).
Less-qualified: non-bank equipment lenders can still be sensible—often cheaper than a short, heavy working-capital deal.
4) Decision flow (use this, not your gut)
- Can you wait 60–90 days without bleeding?
- Yes → pursue bank term/LOC; prepare docs; line up UCC-3s.
- No → skip banks for now; go to step 2.
- Is AR the bottleneck (B2B invoices, slow pay)?
- Yes → evaluate factoring/AR line (resolve UCC conflicts first).
- No → step 3.
- Do you need flexible, revolver-style access?
- Yes → pursue revenue-based LOC; keep deposits squeaky clean.
- No → step 4.
- Is the spend equipment?
- Yes → get equipment financing (bank/SBA if eligible; non-bank if not).
- No → re-run your operating plan. If none of these fit, debt may not be the answer.
5) Three quick case studies (numbers, not vibes)
WIN — Bank consolidation:
Restaurant group with 2 MCAs totaling $180k; profitable last 2 years; DSCR ~1.35x; clean deposits 90 days. Bank term at ~11%, 60 months consolidates both. Payment drops from ~$18k/month equivalent to ~$4.9k/month. UCC-3s filed; breathing room restored.
MARGINAL — LOC beats another term loan:
E-com brand with seasonal swings; profitable but volatile deposits. Bank timeline too slow. Revenue-based LOC approved at $150k. Draws only before inventory pushes, repays on season peak. Lower average carrying cost vs locking into another fixed daily note.
NO-GO (for now) — Pay down and reset:
Contractor with 3 positions, NSFs weekly, tax lien filed last month. A consolidation would help a lot—but nobody will touch it. Plan: close to one position, clean 60–90 days of banking, get on a tax plan, then explore factoring (B2B invoices) or a bank line once the file looks adult.
6) Your “graduate to cheaper capital” checklist
- □ I can wait 60–90 days without choking cash flow.
- □ DSCR ≥ 1.25x, tax returns filed, no past-due taxes.
- □ 60–90 days no NSFs, stable average balances.
- □ Payoff letters ready; UCC-3s queued (or subordination letters in hand).
- □ Full financial packet: 2 yrs returns, YTD P&L & BS, AR aging, debt schedule.
- □ If bank not feasible now, I’ve mapped the next-best lane (factoring / LOC / equipment) that fits the actual constraint.
Bottom line
Stop renting money expensively forever. If you can wait and your numbers hold up, bank is where the real savings live. If you can’t, pick the alternative that fixes the bottleneck (AR, flexibility, equipment)—without stacking daily debits or paying mystery markups. Go direct where possible, control your UCCs, and make your file look like a grown-up business.
(General caveat: programs—especially SBA rules around MCA-style refis—change. Verify the latest before you plan on them.)