Merchant Cash Advance FAQs

Many modern-day businesses seek to restructure merchant cash advance (MCA) debt. A merchant cash advance (MCA) is an upfront payment that is given to businesses. In return. MCA providers receive a portion of the future sales of the business in question. Instead of being repaid monthly, however, merchant cash advances are typically repaid on a weekly, or even daily. basis. If you have a few rough sales days, an MCA can eat into your bottom line – significantly.

For those stuck in cash advance cycles, merchant cash advance consolidation could very well be your solution. Typically, the financial rut experienced from a pressing
MCA is due to the high APR associated with this type of advance, which can total 100 percent, or even higher. Merchant cash advance providers typically offer two repayment options, which include:

  • Fixed daily or weekly withdrawals – Your payment plan is based on your estimated monthly revenue, and does not fluctuate.
  • A percentage of your credit or debit card sales – Your payment is a set percentage of your monthly sales, which is based on your estimated revenue.

Both repayment methods have their advantages and disadvantages. With a fixed amount, your payment is predictable, but if your revenue fluctuates, you may have trouble covering the payments, which leads business owners to consider a merchant cash advance settlement plan or other options. When you pay on a percentage basis, your payments will fluctuate, and if your payments are less than projected, you will likely end up paying more in fees and interest.

Business owners who are having payment difficulties sometimes end up taking another Merchant Cash Advance to cover the first one. This leads to a borrowing cycle that can be challenging to break, but there is Merchant Cash Advance relief available. Our team at Regroup Partners is ready to help you remedy this expensive financial problem!

If you are evaluating solutions such as a Merchant Cash Advance buyout, you may be questioning whether you made the right choice for your business. MCAs can be a powerful tool for injecting cash into your business quickly, and when you truly need it, so an MCA can seem like a tempting decision at the time. Circumstances change, though, so if your MCAs are keeping you up at night, you can, and should, seek Merchant Cash Advance help and advice from our knowledgeable staff.

Like any financial tool, there are Pros and Cons to utilizing an MCA.

They are easy to obtain
The documentation for an MCA is typically minimal.

Quick funding
Underwriting is nominal, so you can get approval very quickly.

Credit matters less
Business owners with less-than-perfect credit may qualify for an MCA.

Being unsecured
You do not need to put your home or business property to secure an MCA.

High fees

The APR for an MCA is much higher than other “traditional” financing options.

A negative effect on credit
Although MCAs are easier to get, the provider may still do a hard credit check, which can harm your credit score.

No fixed repayment term
Depending on your repayment option, your payments may fluctuate, and you could end up paying on your advance for much longer than you originally expected.

A lack of regulation
Since MCAs are not technically loans, they do not have the same level of federal oversight.

Business owners sometimes default on Merchant Cash Advance contracts, because Merchant Cash Advances have high payments. What happens if you default on a Merchant Cash Advance? The consequences can be stressful, leaving you worried and focused on your financial troubles, rather than your business.

The reason that Merchant Cash Advance payments are so high is that they are not considered loans. Banking laws, such as the Truth in Lending Act, are in place to regulate loans. Merchant Cash Advances are considered “factoring products”, which means that you sell a portion of your future business receivables, in exchange for a lump-sum payment. Since it is not technically a loan, Merchant Cash Advance providers are free to set their own interest rates.

The other reason that interest rates are so high, which may have you wondering how to get out of a Merchant Cash Advance, is that MCA providers are taking on higher levels of risk. They work with business owners who have imperfect credit, and their repayment is based on your future earnings, which are not guaranteed. The high fees compensate for the risk MCA providers are taking by lending you money.

If you stop paying your MCAs, you will face aggressive debt collection tactics. Typically, MCA providers will attempt to contact you in every way possible. Aggressive correspondence can be letters, phone calls, and text messages. Some providers even use fake caller ID programs to trick you into answering the phone. Since the MCA industry is not regulated, these advances are not subject to the same restrictions on collection practices that keep other creditors from harassing you. They may call you, your landlord, or just about anyone else you know to get you to start repaying your advance.

Your MCA provider may offer Merchant Cash Advance help in the form of lower payments. This assistance may come at a high price to you, though. Although the provider may lower your payments, your debt may still accumulate interest or penalties, costing you much more in the long run. For example, if considering a restructured MCA payment plan, review the details carefully or consult a professional, such as a Regroup Partners advisor.

Keep in mind that you could be sued for a Merchant Cash Advance breach of contract if you choose to remain in default. An MCA lawsuit can endanger your business assets, which may eventually lead to closing up shop and filing for bankruptcy. If the MCA provider wins the lawsuit, the provider can then collect a judgment, seizing your business cash and other assets to pay off your debt.

We can help you find Merchant Cash Advance relief, though. It is not too late to seek help, even if facing a lawsuit. Regardless of where you are on your MCA journey, we have tailored solutions that can greatly assist you.

At Regroup Partners, we take a personalized approach to MCA debt relief. Options typically include:

  • Restructuring – We work with your MCA provider to find a fair repayment plan that meets your needs.
  • Settling – We help you settle with your MCA provider for less than the amount you owe, so you have access to a clean slate.
  • Consolidating – We connect you with a lender who can consolidate your MCA debt and lower your payments.
  • Reverse Consolidating – If you do not qualify for consolidation, our advisors can devise a reverse consolidation plan as an effective alternative.

Our advisors follow a three-step process to determine which option will best meet your business needs, both now and in the future. We want you to have secured financial footing and the ability to qualify for traditional business financing products with more favorable terms, including longer repayment periods and lower interest rates. We propose an effective, three-step method toward solid financial ground, which includes MCA relief. Our program structure proposes:

  1. Consult. Our FREE consultation allows us to access your situation. We get to know your business, inside and out, so we can provide effective solutions that help you meet your short and long-term business goals. We also take extra time to determine whether or not our program would be a good fit for your needs.
  2. With the assistance of our Merchant Cash Advance lawyers, who are federally licensed, we find solutions that free up your cash flow. Our advisors and legal experts are at your disposal to determine what makes the most financial sense for your business.
  3. We work with your MCA providers so you can settle, repay or consolidate your debt, depending on your situation

There is no reason to hide any longer from your Merchant Cash Advance debt. Our Regroup Partners advisors are ready to help. Contact us to get started right away!

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Disclaimer: Regroup Partners is not a licensed law firm; we have outside counsel on retainer.

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