Can I get an SBA loan if I took MCA money last year?

Last year, my business took out a MCA to cover some short-term expenses. It helped in the moment, but the daily payments were brutal, and I’m still recovering from the cash flow hit. Now that things have stabilized a bit, I’m looking into getting an SBA loan for longer-term financing at better terms.

My concern is—will having had an MCA on my record hurt my chances of getting approved for an SBA loan now? Do lenders automatically see that as a red flag, even if the MCA is fully paid off? Does it matter how recently I took it out?

If anyone has experience getting approved for an SBA loan after taking MCA money—or if you’re a lender who’s dealt with this scenario—I’d love to hear your insight. Just trying to figure out if I should wait longer or if there’s still a shot at approval.

Government

MCA Refinancing

Business Acquisition

Posted by

TJ Manufacturing

June 9, 2025

Answered

Yes, you can still qualify for an SBA loan even if you took Merchant Cash Advance (MCA) money last year, but there are important new rules to understand.

As of June 1, 2025, the SBA has updated its Standard Operating Procedures to prohibit SBA lenders from directly refinancing MCA debt. Specifically, the new rule states: “merchant cash advances and factoring agreements are not eligible for refinancing.” This means that if you have outstanding MCA debt, an SBA loan cannot be used to pay off that MCA directly.

However, your business is still eligible to apply for and potentially receive an SBA loan, even if you currently have one or more MCA loans. The key is that only certain SBA lenders are willing to consider applications from businesses with ongoing MCA obligations. These lenders will carefully review your business’s ability to handle both the existing MCA payments and the new SBA loan payments.

Before these new rules, it was common for SBA lenders to pay off MCA debt as part of the loan process, which often improved a business’s cash flow and approval odds. Now, with the direct payoff option removed, it’s even more important to work with the right lender who understands your situation and is open to working with businesses carrying MCA debt.

Every SBA loan application is unique, so if you’re considering applying with current MCA debt, we strongly recommend reaching out to our team at SBAScore.com. We can help you assess your eligibility and connect you with lenders most likely to approve your application under the new guidelines. If an SBA loan isn’t feasible, there may be alternative options such as consolidations, lines of credit, or conventional term loans.