Reverse consolidation
A reverse consolidation leaves your existing advances in place and uses new funding to cover their payments, changing the schedule without formally paying them off. It can buy breathing room. It can also add a layer. Here is how to tell which.
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In a standard buyout the original advance is paid off and closed. In a reverse consolidation the original positions remain in place, and a new facility supplies the capital to cover their payments, lowering what you pay out of pocket in each period.
It is frequently confused with a buyout. The difference matters: with a reverse consolidation you still owe the original balances, and you have added a new obligation that funds the payments on them.
This shows the mechanics. It is not an offer and it excludes any cost of the new facility.
| Item | Amount |
|---|---|
| Advance A | $400 a day |
| Advance B | $200 a day |
| Combined payments | $600 a day, or $3,000 a week |
| New facility amount | $30,000 |
| New facility repaid over 30 weeks, before any new cost | $1,000 a week |
| Paid out of pocket while it carries the payments | $1,000 a week instead of $3,000 |
| Weeks of existing payments the $30,000 can cover | 10 weeks ($30,000 ÷ $3,000) |
The relief lasts only as long as the new money does. After 10 weeks the original payments resume, and the new facility is still being repaid. That is why a reverse consolidation is a bridge, not a fix, unless revenue is growing into the payments.
A temporary squeeze with a clear way out: a seasonal dip, a delayed receivable, a large order that will pay back soon. Revenue is solid and the existing advances are current.
Revenue is shrinking, the account is already carrying negative days and NSFs, or you are already at the limit of open positions. Another layer raises the weekly pressure, not lowers it.
If the balance is within range, closing the old advances and replacing them with one weekly facility is cleaner. See MCA buyout.
Some advance agreements restrict taking on new funding. A new position that breaches the terms of an existing one can create a default problem.
Funders read existing positions closely: the number of open advances, their payments, whether you are current, and whether deposits can carry the combined obligation. Our published thresholds allow no more than two open positions. See existing positions and stacking and negative days and NSFs for how those are measured.
No. Debt consolidation normally pays off the old debts. Here the original advances stay in place, which is why it is called reverse.
No. The balances remain. It changes how much leaves your account in each period for a while.
It is a common structure, but each advance agreement may set limits on additional financing. Read yours, and ask before taking new funding on top.
Second position adds capital behind an existing advance, which you can use for any purpose. Reverse consolidation uses the new money specifically to carry the existing payments.
A buyout when the balance fits, a longer-term loan or line of credit, or negotiating with the current funder. See getting out of a merchant cash advance.
Same-day decision. Applying takes a few minutes and will not affect your credit score.
