How To Restructure Merchant Cash Advance Debt


How To Restructure Merchant Cash Advance Debt

Merchant cash advances can be a great financing option for small businesses, but they can also lead to overwhelming debt if not managed properly. If you’ve found yourself struggling to make the daily payments, don’t panic. There are options available to restructure your merchant cash advance debt into more manageable terms.

At [Company], we understand the stress of dealing with debt. Our goal is to provide practical solutions to help business owners regain control of their finances. This article will walk you through the pros and cons of different strategies for restructuring MCA debt, as well as some defense tactics if legal action is taken against your business.

First Steps

Before diving into restructuring options, there are a few key steps every business owner should take:

  • Review your merchant cash advance agreement and understand the terms, daily repayment amounts, penalties for late payments, etc.
  • Calculate how much you currently owe and determine if you can afford the payments
  • Try negotiating with your MCA provider directly to see if they’ll lower payments or waive fees
  • Consult a small business lawyer or financial advisor for guidance

It’s also wise to start setting aside cash reserves if you can. This will provide a buffer as you work through restructuring options.

Pros and Cons of Debt Restructuring Strategies

There are a handful of common strategies used to restructure MCA debt. Here’s an overview of the pros and cons of each approach:

Debt Consolidation

Debt consolidation rolls multiple debts into one new loan with lower interest rates and monthly payments.

Pros Cons
  • Lower interest rate
  • Single monthly payment
  • Fixed repayment schedule
  • Closing costs and fees
  • Collateral often required
  • Damages credit if not repaid

For more info checkout this NerdWallet article.

Balance Transfer

A balance transfer shifts debt from a high-interest MCA to a lower-interest line of credit.

Pros Cons
  • Lower interest rate
  • Pause on MCA payments
  • Balance transfer fees
  • Intro 0% APR periods are limited

NerdWallet has a good balance transfer guide here.

Debt Settlement

Debt settlement involves negotiating with creditors to pay a lump sum that is less than what you owe.

Pros Cons
  • Pay fraction of balance
  • Avoid bankruptcy
  • Damages credit score
  • Tax implications on settled debt
  • Debt collectors may still pursue legal action

The Balance has a helpful guide on debt settlement pros and cons.

Defense Tactics if Sued

If your MCA provider pursues legal action over late or missed payments, don’t panic. There are still options to defend yourself:

  • Claim the MCA contract terms were unfair or deceptive
  • Argue the MCA provider didn’t fully explain repayment terms
  • File bankruptcy to pause collections and discharge debt
  • Negotiate a settlement offer

This Nolo article covers defenses in more detail. Consulting a lawyer is highly recommended if you’re sued.

The Bottom Line

Restructuring MCA debt takes time and effort, but it is possible to regain control of your finances. The key is acting quickly, understanding all your options, and seeking expert guidance. At [Company], we’re here to help business owners through these challenging situations with empathy and practical solutions. Don’t hesitate to reach out if you need support.

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Our team is available always to help you. Regardless of whether you need advice, or just want to run a scenario by us. We take pride in the fact our team loves working with our clients - and truly cares about their financial and mental wellbeing.

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