A recent survey showed that 80% of all small business borrowers who secured an SBA loan said it helped their business; with some reporting the lower interest rate funding of an SBA led to substantial growth.
Now, imagine how beneficial an SBA loan could be for businesses looking to refinance large merchant cash advance balances into more stable, lower interest rate SBA loans.
Highly beneficial, right? Right.
But MCAs can’t be refinanced into SBA loans, right?
Well…
There’s a very important rule change regarding MCAs and SBA loans. And it’s coming this week, October 1, 2026.
Here’s a quick look:
Before October 1, 2026: SBA rules explicitly said merchant cash advances and factoring agreements were not eligible for refinancing.
Starting October 1, 2026: SBA’s new rule creates a pathway for a sales-based repayment agreements (like MCAs), to potentially become eligible for refi into an SBA loan.
But the new SBA rule? It’s narrow.
Very narrow. Let’s have a look
Under SOP 50 10 Version 8.1, (taking effect October 1, 2026) sales-based repayment agreements, such as merchant cash advances, may indeed be eligible for refinancing.
Which is great, But of course there’s an if.
A big bunch of if’s, actually.
Your business could be eligible to refinance and MCA into an SBA loan If…
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Your original MCA agreement has already been converted to a term loan.
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That term loan has been amortized (you’ve been making your regular, scheduled payments) for at least two years… 24 continuous calendar months.
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No additional agreements (MCA stacking or additional sales based cash advance agreements) have been incorporated into your business since you converted the prior agreement into a loan.
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Any and all sales-based repayment agreements (MCA or otherwise) are no longer active.
What Really Sticks Out Is the Two Year Rule.
But it’s Not the Only Requirement, Of Course.
The new rule doesn’t mean that any/every MCA that’s been converted to a term loan is eligible to be refied into an SBA after 24 months of continual on-time payments.
Other SBA refinancing rules, of course, still apply.
According to the SBA, an eligible borrower must also be, in general, operating a for-profit business, be located in the US, meet SBA size standards, must be creditworthy, and must show a reasonable ability to actually repay.
Simply put, surpassing the 24-month period shouldn’t be viewed as a guarantee of SBA approval, and a business with current MCAs should not assume that an SBA loan will eventually replace an existing MCA agreement.
The new rule, in plain English, only offers a glimmer of hope for some. It’s not a small business savior.
What Does This New Rule Mean for Businesses with High MCA Debt?
Obviously, if your MCA or multiple MCAs are still active, the new rule does not make it immediately eligible for SBA refinancing.
But, if the MCA obligation has already been converted into qualifying term financing, the two-year amortization period becomes important.
Meaning depending on how long you’ve been making your regular payments, you may already be on the verge of qualification.
Now, if you haven’t rolled your MCAs into a term loan yet, now’s the time to seriously consider getting that 24-month clock running. Because the 24-month minimum is the biggest hurdle.
To speak with a Berkshire Financial Services Finance Manager about your file, call 1-800-801-1019.
What All This Means for Your Merchant Cash Advance Contract/Contracts
The new SBA rule does not eliminate MCA balances. It does not require MCA providers to convert agreements into a term loans. If fact, it requires nothing of substance from providers themselves.
It does, however, allow for a potential refinancing path forward for certain MCA obligations.
For a business owner with high MCA debt, especially those experiencing daily or weekly account draws, the first step is understanding your existing contracts.
We, Berkshire Financial Services, understand your contracts. We understand exactly what you’re going through…
And importantly, we understand precisely how to help you navigate the best outcomes for both you and your business.
While a refi of MCA into SBA loans offers only a portion of business owners a glimmer of hope (those either surpassing or close to the 24-month minimum) …
Berkshire offers business owners currently dealing with MCA issues more than hope.
We offer results. Now.
To speak with a Berkshire Financial Services Finance Manager about your file, call 1-800-801-1019.
We’ll gladly go over all the possibilities you have regarding what exactly you can do, and cannot do, regarding your MCA obligations.
This article is for informational purposes only. Not legal advice. Berkshire Financial Services is not a law firm. Results vary.