RECONCILEMYMCA.COM provides first-rate cash advance relief services to businesses throughout the nation that are struggling to meet the terms of their obligations under an MCA agreement. Our Team leverages our experience within the industry with our legal team to help our clients restructure their cash advances and avoid default.

Businesses that generate revenue through sales and credit card receivables often rely on MCA and Factoring agreements to obtain funding for working capital. When credit becomes restricted or a business is otherwise in distress, an alternative source of funding is a merchant cash advance, also known as an “MCA.” This form of cash advance is attractive to businesses that are unable to obtain funding from more traditional sources but often come with onerous terms. Defaulting on the payment could subject the merchant to aggressive collection actions that jeopardize both the merchant’s business and personal assets.

Regardless of whether your business is struggling to pay vendor obligations or meet payroll, you should not go up against an MCA provider alone. Backed by Confessions of Judgment and Personal Guarantees, merchant cash advance companies can move quickly to seize your assets and force you into bankruptcy. With in your corner, you will have confidence knowing that your cash advance payments will be reduced and your business and livelihood will be protected.

Frustrated business owner sits at computer
Although a cash advance can provide a business with quick access to working capital, the arrangement is not backed by collateral. Therefore, prior to funding, the merchant will be required to sign a confession of judgment (COJ) essentially admitting liability to the MCA company in advance. In the event of default, the MCA company will file the COJ affidavit as a judgment, and attach the merchant’s bank accounts and assets. Additionally, the borrower is often required to sign a personal guarantee, which means the MCA company will go after the business owner’s personal assets.
Key Terms of MCA Agreements: Confessions of Judgment, Personal Guarantees, and Reconciliation Clauses

But there are powerful remedies available to the merchant as well. In many cases, the MCA company is legally obligated to work with the business owner to restructure the payments in a way much more favorable. If the MCA company fails to work out a new payment plan, this may constitute a breach of contract on the funders’ part and could even effectively convert the MCA agreement into an illegal loan.

Client working with attorney on merchant cash advance lawsuit
How Can Help
If Your Business Is Struggling

If your business is struggling to meet the terms of an MCA agreement, you face an uncertain future. The potential forfeiture of your business, which you worked so hard to create, and even the loss of personal assets, are real possibilities. That’s the time to call ReconcileMyMCA. Our experienced attorneys will review your cash advance contract and other relevant financial information and design a plan to restructure your cash advance so that you pay less now. This will give you the room you need to meet your other obligations and take the necessary steps to achieve your future sales goals.

While Some Merchants May Simply Default

While some merchants may simply default and seek bankruptcy protection, our objective is to help you continue business operations by restructuring the payment terms of the cash advance with your MCA provider.

Customer hands credit card to clerk
How Do Merchants Cash Advances Work?

While merchant cash advances have traditionally been tapped by businesses that rely on credit card and debit card sales for revenue, such as retail outlets and restaurants, MCA offerings have become more widely used since the financial crisis of 2008. As such, many businesses that have entered the merchant cash advance market are not familiar with the risks associated with this specialized form of factoring.

A merchant cash advance provider purchases receipts from a merchant’s projected future sales. The merchant receives an upfront sum of money, minus certain fees, in exchange for a portion of future sales, and the advance is repaid through fixed daily debits directly from the merchant’s bank account in the form of authorized Automated Clearing House (ACH) withdrawals. The repayment period typically ranges from 3 to 12 months, depending on projected future sales.

Is a Merchant Cash Advance Considered a Loan?

MCAs are not considered “loans,” which means usury laws do not apply. This allows an MCA provider to arrange payments that are quite high. And these daily withdrawals and fees can quickly add up, potentially putting a merchant in a bind. Generally, fees are determined by the merchant’s ability to repay the advance. The MCA company arrives at a factor rate based on its risk assessment of the merchant. Obviously the higher the factor rate, the higher the fees.

It is important to note that a factor rate is not an interest rate; otherwise the MCA would legally be considered a loan, and loans are unconditionally repayable. Payment of a merchant cash advance, on the other hand, is conditional because it is based on the purchase of future receivables and therefore does not constitute a loan.

Business owner reviews financials

Moreover, the courts have held that an MCA agreement must contain specific terms to avoid being considered a loan, such as:

  • The future receipts are only being sold by the merchant to the extent they are available — if future receipts decline due to a material adverse change in business conditions, the MCA provider sustains the loss
  • The obligation to deliver the future receivables is conditioned upon the continuation of the merchant’s business operations
  • A bankruptcy filing by the merchant does not constitute a breach or event of default

Additionally, the merchant must abide by certain covenants in the MCA agreement and also agree not to engage in fraud or other deceptive practices, which would serve to deny the merchant cash advance company of its purchased receivables.

Contact Today

Remember: time is of the essence. If you default on a cash advance, the MCA company may quickly move to file a confession of judgment and seize your bank accounts and other assets. For the prompt, efficient, and reliable debt relief services that can provide, please complete the convenient intake form. Our team is ready to respond 24/7.

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