The SBA stopped allowing MCA refinancing in 2025. Brokers are still selling it.

If you are carrying a merchant cash advance and someone has offered to refinance it into an SBA loan, that offer describes something the rules no longer permit. This is not a grey area or a matter of finding the right lender. It changed on a specific date, in a specific document, for a stated reason.

What the rule says

SBA’s Standard Operating Procedure 50 10 8 took effect on 1 June 2025. It states that merchant cash advances and factoring agreements are not eligible for refinancing with 7(a) loan proceeds. The prohibition is not limited to one product line — it applies across Standard 7(a), Express, Export Express and International Trade loans.

Before this, MCA takeout was a real, if difficult, path. Brokers built entire campaigns on it. Those campaigns did not all stop when the rule did.

Why the SBA did it

The agency’s reasoning is worth quoting in substance because it explains something about the product itself. SBA determined that merchant cash advances — which typically involve selling future receivables at a steep discount, with demanding repayment schedules — do not align with the agency’s objective of promoting sustainable, long-term business growth.

Read that again from the borrower’s side. A federal agency whose entire purpose is expanding access to small business credit looked at this product and concluded it works against the outcome the agency exists to produce. That is a stronger statement than most people selling against MCAs manage to make.

What is actually left

The honest list is shorter than anyone would like.

Negotiate directly with the advance provider. Modified payment terms are more available than borrowers expect, particularly when the alternative is a default the provider also does not want. This is unglamorous and it is usually the first real option.

Use SBA financing for other eligible purposes. You cannot use 7(a) proceeds to pay off the advance. You can use them for real estate, equipment or other eligible debt, and the resulting improvement in cash flow can make the advance survivable. This is indirect relief, not a takeout, and anyone presenting it as a takeout is blurring the line on purpose.

Fix the underlying cash flow. Revenue and cost work is not financing advice and it is not what anyone wants to hear from a lender. It is also frequently the thing that actually resolves the situation.

What to be careful of

The gap left by this rule is being filled by two things worth naming.

The first is brokers who have not updated their pitch, or who have and are counting on you not knowing. If someone is still advertising SBA refinancing of MCA debt, that tells you something about how they are keeping current with the rules that govern the products they sell.

The second is debt settlement operations that market themselves to businesses in exactly this position. Settlement is a different thing from refinancing, it carries consequences for your credit and your relationships with the provider, and the industry attracts operators who charge substantial fees for outcomes the borrower could often have reached alone.

Where this leaves the specialty programs

Nothing in this rule affects C-PACE, USDA B&I or SBA 504 for the purposes they were built for. If you own a building that needs work, C-PACE finances improvements at a fixed rate over decades and does not care about your credit file the way an unsecured lender does. If your facility sits in a community under 50,000 people, USDA B&I can run to forty years. If you occupy the building you are buying, SBA 504 fixes your rate for the long term.

None of these will pay off a merchant cash advance. All of them are reasons the advance might not have been necessary in the first place.