Merchant cash advance payments too high? Three routes, in the order to try them

The advance made sense when it was signed. Takings were steady, the daily debit looked small next to them, and the money did its job. Then trade slowed, and the debit didn’t. Now it leaves the account before wages, rent and stock, and some days it’s a bigger slice of the till than you can spare.

This guide doesn’t re-explain what an advance costs; our guide to working out what a merchant cash advance really costs does that. Here we take the problem as given and set out the three routes out of it, in the order most owners should try them.

Every number in this guide is made up to show the mechanics. Your own contract and statements are what count.

First: which kind of advance do you have?

Everything depends on how repayments are collected. Pull the agreement out and find the repayment clause.

If your agreement says…	What happens when takings drop	Your first move
A percentage of each card settlement	Repayments fall automatically, but the advance takes longer to clear	Check the provider is actually applying the percentage
A fixed daily or weekly debit, with a reconciliation or adjustment clause	The debit stays the same until you ask for a review	Request a reconciliation in writing
A fixed debit with no adjustment clause	Nothing changes unless the provider agrees	Ask for a variation, and line up a refinance in parallel

Also look for the words “estimated”, “specified percentage” or “true-up”. Some agreements set a fixed debit as an estimate of an agreed share of your sales. When real sales fall below the estimate, the agreement may give you the right to have the debit reviewed. If that language is there, you’re asking the provider to apply its own contract, not to do you a favour.

Route 1: ask for a reconciliation or a variation

This is the cheapest route, because nothing new is borrowed. It suits a dip you can explain and expect to end.

How it works

You write to the provider, show that takings have fallen, and ask for one of two things:

• A reconciliation, where the agreement has one: the provider compares what you’ve paid with what the agreed share of your real sales would have been, then adjusts the debit or credits the difference.
• A variation, where it doesn’t: a temporary lower debit for a set number of weeks, a short pause, or a longer term. Expect the total repayable to stay the same, or rise, even if the debit falls.

What the provider will want

Make the request specific and complete so it can be decided in one pass.

1. The last three months of business bank statements, showing both deposits and the provider’s debits.
2. A weekly takings summary from your point-of-sale system for the same period, set against the same weeks last year if you have them.
3. The reason for the drop, in two or three plain sentences: roadworks, a lost contract, a seasonal low, a refit.
4. The debit you can carry, and for how long. A number and a date (“$300 a day for eight weeks, back to normal from the first week of January”) lands better than “less”.
5. A request for the answer in writing, including the new debit, the new expected end date and whether the total repayable changes.

The mistake that costs the most

Don’t cancel the direct debit or let payments dishonour while you wait. Many agreements charge a fee for each failed debit and treat repeated failures as a default, which can bring the full balance due. It also leaves a trail of dishonours in the statements every future lender will read. If cash is genuinely short this week, tell the provider before the debit runs, not after.

Illustrative example

A café took a $60,000 advance with $78,000 to repay through a fixed debit of $520 each business day. When it signed, average daily deposits were about $3,500, so the debit was roughly 15% of each day. A long run of roadworks outside dropped deposits to about $2,400 a day, and the same $520 became more than a fifth of the till.

The agreement described the debit as an estimate of 15% of sales and included a review clause. The owner sent three months of statements and a weekly takings report and asked for the debit to be reset to match. At 15% of $2,400, the debit would be about $360 a day. The provider agreed to a lower debit until the works finished, with the total repayable unchanged and the end date pushed out.

That’s a good result for a temporary problem. It would be the wrong answer if the roadworks were permanent, which is where Route 2 comes in.

If the provider won’t move, or you’re carrying more than one advance, tell us where things stand and we’ll look at which refinance fits. Asking doesn’t touch your credit file.

Route 2: refinance the advance into one repayment

When the provider refuses, offers too little, or the balance is simply too heavy for normal trading, refinancing changes the shape of the debt rather than just pausing it.

How it works

You get a written payout figure from the provider, valid to a set date. A new lender pays the provider directly at settlement, the daily debit stops, and you repay the new loan weekly or monthly over a longer runway. The full mechanics, including PPSR releases and stacked advances, are on our refinance a merchant cash advance page.

Who it suits

• The business is profitable on a normal week; the advance is the problem, not the model.
• The dip in takings is likely to last longer than a few months, or the debit was too high from day one.
• There are two or three advances stacked together, so a variation on one doesn’t fix the total drain.

What the lender needs

• Each advance contract, plus a payout letter dated within the last fortnight.
• Three to six months of business bank statements.
• Recent BAS or management accounts, if you have them.
• A short note on why takings fell and what has changed since.

The trade-off, in dollars

A refinance over a longer term can cost more in total dollars than the advance had left, or less if the advance was very expensive. Ask any lender for the total repayable in dollars and the weekly repayment, then set both against what you’d still owe the provider. For most owners in this spot, the decisive number is the weekly outgoing, because that’s what decides whether a second advance gets taken to cover the first.

Route 3: consolidate against property

If you or the business own property with equity, a property-secured loan can clear the advance alongside other expensive debts, such as a second advance, an online loan or an overdue supplier, in one settlement.

	Route 1: variation	Route 2: refinance	Route 3: consolidate with property
Suits	A short, explainable dip	A balance too heavy for normal trade	Several debts, or the longest runway
New borrowing?	No	Yes, usually sized on statements	Yes, secured over property
Typical size	Not applicable	Typically $5,000 to $500,000	$20,000 to $5,000,000
Total repayable	Same or higher	Depends on term	Depends on term
Weekly outgoing	Lower for a period	Lower and predictable	Usually lowest
How it ends	Debit returns to normal	Repaid from trading	Refinanced to a bank, or repaid from trading or a sale

The consolidating business debt with property page covers how valuations, second mortgages and payouts at settlement work. The honest limit: property security lengthens the runway but puts the property at risk if trading doesn’t recover. Use it when the business works and the debt structure doesn’t.

What if you think the contract itself is unfair?

Two official avenues are worth knowing before you rely on either.

Unfair contract terms. ASIC explains that the unfair contract term protections cover standard-form contracts with a small business, meaning fewer than 100 employees or turnover under $10 million in the last income year, and for financial products an upfront price of no more than $5 million. An unfair term is void, and since the 2023 reforms a provider that uses one can face penalties. ASIC’s own examples include a lender’s right to change terms on short notice and default fees beyond what’s needed to protect the lender. Only a court can decide a term is unfair, so treat this as leverage in a negotiation, not a quick fix.

Dispute help. AFCA can only hear a complaint if the provider is a member, and some business-only lenders aren’t. The small business ombudsman has told borrowers to “ensure the lender is an AFCA member” (ASBFEO). Where AFCA isn’t available, the ASBFEO’s dispute support service can assign a case manager and point eligible businesses to low-cost advice or mediation, though it can’t impose an outcome.

None of this stops tomorrow’s debit. Run any dispute alongside Route 1 or Route 2, not instead of them.

When funding won’t help

If the business loses money even without the advance, a lower debit or a refinance only delays the problem. Sit down with your accountant and look at margins, rent and wages first. The business.gov.au guide to managing debt is a sensible checklist for that conversation. Funding works when it fixes the structure of a business that earns its keep.

A seven-day plan

1. Day 1: Find the repayment and any reconciliation or adjustment clause in every advance agreement.
2. Day 2: Pull three months of bank statements and a weekly takings report.
3. Day 3: Work out the debit the business can carry, as a dollar figure and an end date.
4. Day 4: Send the written request to the provider, with evidence attached. Ask for a payout figure in the same email.
5. Day 5: Check AFCA membership using the provider’s legal name.
6. Day 6: Put your situation through the solution finder and see which refinance routes rank highest for your file.
7. Day 7: Decide. A firm written variation for a short dip, or a refinance if the answer is no, too small, or the dip isn’t temporary.

Whatever you choose, plan the exit from the start. The trading exit page shows how to set the new repayment against realistic takings, not your best month.

Ready to swap the daily debit for something you can plan around?

Advance providers quote quickly, and the debit starts the next day. Getting out takes a little more care, and that’s the work we do every week: reading the agreement, the statements and the payout letter, then finding the route that ends the squeeze rather than shifting it.

Enquiring takes about a minute and won’t touch your credit score; a check only comes later, if you decide to go ahead. We won’t send your details to a pile of lenders, so your phone stays quiet. A real specialist reads your file and calls you to talk it through. Please fill in the form accurately, including each advance, its daily or weekly debit and the payout figure if you have it, so the first option we put to you is one that clears it.

Check your options →