Merchant cash advances provide small businesses with working capital when traditional sources of credit are not available. At the same time, these cash advances are not subject to laws that govern other small business loans and often come with onerous terms. When a business fails to meet its obligations under an MCA, one option is to consult a debt consolidation company, however, their solutions may be unworkable for your business and may also fail to protect your business assets.
Reconcile My MCA provides sophisticated cash advance relief services to businesses throughout the nation. Our attorneys have extensive experience reviewing MCAs and helping our clients project future revenues in order to restructure cash advance payments. Above all, we are committed to protecting you, your business, and your personal assets.
Can a debt consolidation company help with my merchant cash advance?
A debt consolidation company typically explores options that work for small business loans, however, merchant cash advances are not considered loans, which means your business may still be at risk. Some of those options include:
- Term Loans — A debt consolidation company may recommend replacing your merchant cash advance with a term loan. Lenders often place restrictions on how the funds may be used, however, and qualifying for a term loan can be a lengthy process. If you are at risk of defaulting on your cash advance repayments, merchant cash advance companies will likely file a confession of judgment before the term loan is approved, leaving your business assets at risk of seizure.
- Asset-Backed Loans — These loans are guaranteed by your business assets. This means that if you fail to pay back the loan, the lender will seize your assets to recoup the debt. Asset-backed loans are also often backed by personal guarantees, which puts your personal assets at risk if you default on the loans. As with a term loan, securing an asset-backed loan can take time, and the terms of your MCA may restrict you from securing this type of financing by including a representation that you will not pledge your business assets.
- Debt consolidation loans — If you have multiple cash advances, it may be possible to take out a single loan to repay all of your existing debt, including a cash advance. Although many loan products can be used for debt consolidation, traditional lenders are often unfamiliar with the terms of merchant cash advances.
- Bankruptcy — If you are at risk of defaulting on an MCA, seeking bankruptcy protection may prevent your business from failing. Moreover, bankruptcy is not considered an event of default under the terms of a merchant cash advance agreement. On the other hand, bankruptcy will have a negative impact on your credit rating, making it difficult to secure financing in the future, which is the reason you may have initially opted for a merchant cash advance. Finally, given that you likely signed a personal guarantee as a condition of obtaining the cash advance, the merchant cash advance company will go after your personal assets even if you file for bankruptcy.
In short, debt consolidation companies may promise a range of solutions that may not prevent you from eventually defaulting on your merchant cash advance.
How Reconcile My MCA Can Help
If you are at risk of defaulting on a merchant cash advance, our legal team can work with you to renegotiate the loan terms. An MCA typically includes a reconciliation clause, which protects you if your future receivables fall short. You are required to notify the merchant cash company of the shortfall, however, and provide documentation verifying the decline. The funder must then work with you to lower the amount of daily withdrawals until your receivables turn around. In order to take advantage of a reconciliation clause, you must also show how you intend to return your business to profitability.
This is where the experienced attorneys at Reconcile My MCA can help. When you consult us, we will review your MCA and financial statements and quickly work to renegotiate the payment terms of your cash advance. Don’t delay — complete the convenient intake form on our homepage or give us a call. Our team is ready to help 24/7.