A $19M Fund Just Raised to Refinance MCA Debt — 61% of Its Deals Are Refis. Here's What That Means for Borrowers

The fund raise, in plain English

Founders First Capital Partners, a San Diego-based small-business lender, closed its second Change Catalyst Fund at $18.6 million — above its target, after a $12 million first close back in April, according to ImpactAlpha. The raise was covered by industry press on October 7–8, with deBanked reporting the round as roughly $19 million.

The investor list is what makes this newsworthy rather than routine: the Wells Fargo Foundation (which contributed $500,000, fiscally sponsored by Realize Impact), Deutsche Bank Americas Foundation, Sunrise Banks, and Community Reinvestment Fund USA. When bank-adjacent institutions put real money into refinancing MCA debt, they are making a statement about where they think the market need is.

The fund offers revenue-based financing, term loans, and hybrid loans to service-based small businesses in underinvested U.S. communities, per founder and CEO Kim Folsom. Total capital deployed across the firm now exceeds $23 million.

Why 61% of a lender's book is MCA refinances

That figure is the story. Founders First says the 61% refinance share is deliberate — businesses keep arriving carrying high-cost MCA debt, so the firm built a product for it. Loan volume grew 46% year over year on exactly that demand.

The demand didn't come from nowhere. In 2025, the SBA stopped allowing its 7(a) loans — the flagship federal small-business program — to be used to refinance MCA debt (the rule took effect June 1, 2025). For years, an SBA 7(a) was the classic escape hatch: roll your expensive short-term advances into a long-term government-backed loan at single-digit rates. That door is now closed for MCA paper.

So where did the demand go? To private capital. A mission-driven fund raising $19 million specifically to refinance MCA debt is the clearest signal yet that the refinancing market has moved from a niche product to an asset class — which means borrowers are paying real money for debt that should have been restructured months ago. If you are carrying advances at factor rates of 1.35–1.50, this is the market telling you: refinance demand is at record highs. Our complete MCA refinance guide walks through how the process works.

What a 15-point APR drop actually saves

deBanked reports that borrowers refinancing MCAs through Founders First saw an average effective APR decrease of about 15 percentage points. Sounds abstract — here is an illustrative translation into dollars (not a quote, your terms will differ):

A $50,000 advance balance at a 1.40 factor rate means you owe $70,000, typically remitted daily over about 9 months — roughly $360/day, or about $7,800/month of cash flow swallowed by one position. That is the stacking math our stacking guide warns about.

Refinanced at roughly 45% effective APR over 24 months (about 15 points under a typical MCA's effective cost), the same $50,000 costs about $3,200/month in monthly payments — freeing roughly $4,600/month in cash flow. Total repayment over the longer term can actually be higher than the original advance's $70,000; the refinance buys breathing room, not necessarily a smaller check. That is the honest trade: refinancing converts a daily cash-flow crisis into a manageable monthly obligation.

Before you sign anything, run your own numbers through a true-cost comparison — our MCA true-cost guide has the factor-rate-to-APR math so you can compare any two offers apples to apples.

The catches: who this fund is (and isn't) for

Three things to know before you get excited about a $19 million refinance fund:

• It is mission-driven and narrow. The fund targets service-based small businesses in underinvested U.S. communities — reportedly companies doing $1–$10 million in annual revenue with commercial and government customers, concentrated in California, Illinois, Pennsylvania, New Jersey, New York, the D.C. area, and Minnesota's Twin Cities. If you are a restaurant in Tampa with one MCA, this fund is probably not your lender.
• Revenue-based financing is not free money. deBanked notes the firm does not advertise its own APRs, and a 2023 hybrid contract it obtained excluded revenue-based collections from interest-rate calculations. "Effective APR decrease" is the company's framing — read the actual payment terms before celebrating.
• One fund is one quote. Founders First is a single lender with a specific mission and underwriting box. The best refinance outcome comes from comparing multiple offers — a broker compares across the market instead of handing you the one product a single platform happens to sell.

What to do if you're sitting on expensive MCA debt

1. List every position. Balances, factor rates, daily/weekly remittances, remaining terms. You cannot refinance what you cannot quantify.
2. Compute the true cost. Convert each factor rate to an effective APR equivalent so the offers you collect are comparable — our true-cost guide has the formula.
3. Collect at least three refinance quotes. Term lenders, revenue-based lenders, and consolidation specialists all price this risk differently. One quote is a guess; three is a market.
4. Model the cash flow, not just the cost. The point of refinancing is monthly breathing room. Compare monthly outflows, not just total repayment — and check for prepayment penalties on your current advances.
5. Move before the next payment cycle. Every week of daily remittances at 1.40+ is cash you will never get back. This market is competitive for borrowers right now — the $19 million raise proves lenders are hungry for your refinance.

Frequently asked questions

Can I refinance my merchant cash advance with Founders First?

Possibly, if you fit their box: service-based small business in an underinvested community, roughly $1–$10 million in annual revenue with commercial or government customers, concentrated in their focus regions (CA, IL, PA, NJ, NY, D.C. area, MN). Most businesses will find better odds shopping the broader refinance market — our refinance guide explains the options.

Can I use an SBA loan to refinance my MCA?

No — not since June 1, 2025, when the SBA barred 7(a) loans from refinancing merchant cash advance debt. You will need private refinance options: term lenders, revenue-based lenders, or consolidation products. That rule change is a major reason refinance demand surged 46% at lenders like Founders First.

What does a 15-percentage-point APR drop mean in practice?

It is the lender's reported average for borrowers who refinanced MCAs through the fund — the effective APR on their new financing was about 15 points below what the MCA was costing them. Your results will vary with your revenue, time in business, and how many positions you carry. See the worked example above for an illustrative dollar translation.

Is refinancing always cheaper than keeping the MCA?

Not automatically. Refinancing usually lowers your monthly outflow but stretches repayment over a longer term, so total interest can exceed the original factor cost. Refinancing wins on cash-flow relief; verify the total cost with true-cost math before you sign. Stacked positions almost always benefit — see how stacking multiplies the damage.

Why are banks funding MCA-refinance lenders now?

Because the demand is enormous and growing — 46% year-over-year loan growth at one fund, with 61% of deals being refis. With the SBA door closed and MCA costs at historic highs as the Fed keeps rates elevated, refinancing short-term business debt has become one of the clearest lending opportunities in the market. It is also a data point in the broader platform-lending shift — see our piece on Stripe and FedEx's lending partnership.