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How Can You Restructure Your Merchant Cash Advance?

So you took out a merchant cash advance (MCA) for your business but now you’re struggling to make the payments. Don’t panic – you have options to restructure the debt and ease the burden. With some strategic moves, you can get your finances back on track.

What is a Merchant Cash Advance?

First, let’s review what an MCA actually is. An MCA company gives you an upfront lump sum of cash in exchange for a percentage of your future credit card sales. You pay back the advance in daily or weekly installments until it’s fully paid off.The fees and payment structure essentially make MCAs a very high interest rate loan. And if your business hits a rough patch, all those payments deducted from your account can sink you fast.

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Consolidate Multiple Advances

If you have more than one MCA outstanding, consolidation can provide some relief. This involves rolling all your agreements into one new MCA with lower fees.While you still owe the full amount, consolidation reduces your daily repayment percentage to free up cash flow. Just check your current contracts for any prepayment penalties before refinancing.A consolidation MCA may also extend your repayment term. Just don’t let the lower payments fool you – this means you’ll pay more interest fees over the long run.

Negotiate With Your MCA Company

Once you analyze your situation, it’s time to negotiate better terms. Here are some options to discuss:

  • Lower the daily repayment percentage
  • Extend the repayment term
  • Waive any prepayment penalties if refinancing

The MCA company would rather collect something than force you into bankruptcy and collect nothing. Explain how the current burdensome terms may bankrupt your business – it’s in their interest to restructure the debt.

Seek Alternate Financing

Research if you qualify for lower-cost financing to pay off the MCA. Options to explore:

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  • SBA loans with reasonable rates
  • Bank loans or lines of credit
  • Factoring companies to fund invoices

Replacing an MCA with lower-cost financing can save big on fees over the long haul. Just be sure alternate lenders don’t also bury you in fees or rigid repayment terms.

Attempt Settlement

If your business still struggles after restructuring, settlement may wipe out a portion of what you owe. The MCA company has incentive to settle if they doubt you can repay the full amount.A qualified attorney can negotiate settlement for as little as 20-50% of your outstanding MCA debt. Any forgiven debt also helps your business return to profitability.Just know that settlement negotiations happen alongside any collection lawsuits filed against your business. Work with an attorney to legally respond to the lawsuit while working on settlement.

Don’t Ignore Default Notices

When you default on an MCA, the company can file suit against you and obtain judgments to seize your business and personal assets. Act fast once you get a default notice to avoid escalation.Immediately discuss restructuring options with your MCA provider instead of dodging their calls. Silence only makes them assume the worst and quickly turn to aggressive collections.

Close Down Temporarily

If your business just can’t sustain operations now, consider temporarily closing, known as “mothballing.” This pauses any legal action and buys you time to restructure debts.To properly mothball, you must file formal business dissolution papers with your state. This keeps your business entity intact while legally closing operations. Talk to a business attorney to do this properly.Once debts are restructured, you can then revive operations by reopening your business. This avoids the hassle of dissolving then forming a whole new business later.

Seek Legal Help

Restructuring MCA debt involves legal intricacies. Connect with a qualified business attorney before taking any action related to your outstanding cash advances.An attorney can review your MCA contracts to devise the best restructuring strategy. They can also legally respond to any collection lawsuits filed against you.The right legal guidance maximizes your chances of restructuring MCA debt on affordable terms – or reaching settlement if needed. Don’t let cash flow issues snowball into business failure or personal bankruptcy. Act now to regain control of your finances.I hope this overview gives you a game plan to tackle your merchant cash advance situation. The key is facing reality and taking proactive steps before things spiral out of control. With smart moves, you can ease the MCA repayment burden and steer your business back to stability.Let me know if you have any other questions! I’m always happy to chat more about the options for getting MCA debt under control.

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$500,000 MCA Restructured Over 3 Years
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