HOW DEFAULT ON BUSINESS LOANS CAN AFFECT EMPLOYEE MORALE

ARE YOU STRUGGLING TO KEEP UP WITH YOUR EXISTING BUSINESS DEBT?

Many business owners accumulate business debt because they were hoping to grow, or perhaps they needed a lifeline and MCA’s were easy money. Either way, defaulting on that debt can feel like pouring money down the drain—and it impacts employees more than you might expect. Regardless of the type of business debt you have – we can help you.

DEFAULT CAN SHOCK YOUR EMPLOYEES
When you enroll in a business debt settlement program, like the one offered by Delancey Street, you’re creating a way to avoid going out of business. In contrast, ignoring debts or failing to negotiate with lenders can create a ripple effect on your workforce. When you default, lenders will start calling your company, your employees, your associates, your vendors – anyone possible. The moment employees hear about potential missed payments, everything from morale to performance can suffer. They might think you’re going out of business, or suffering.

REGARDLESS – WE CAN HELP YOU.

UNDERSTANDING THE LEGAL IMPLICATIONS
Defaulting on a business loan—be it a merchant cash advance, line of credit, or term loan—can lead to many negative consequences:

1. Lawsuits and Judgments: Creditors will file claims, seize assets, or garnish bank accounts. Check out the Small Business Administration (SBA) for insights on federal collection efforts.
2. Personal Guarantees: Many MCA lenders want you to personally back the debt, putting your personal property at risk under certain circumstances. They will try to enforce a personal guarantee, if they can.
3. Violating Wage Laws: If your MCA default triggers delays in payroll, you could face issues with the Department of Labor (DOL) under the Fair Labor Standards Act. If they seize your bank account, it’s likely your not going to be able to pay your payroll on time.

Each of these challenges can impact your employees, creating anxiety about whether the next paycheck will arrive on time. It’s likely your employees will worry that your business is on the brink of going out of business. They might consider going to another employer.

EMPLOYEE MORALE AT RISK
When default notices start arriving in the mail, employees notice changes in management’s mood and in workplace communication. If creditors issue legal notices—or you receive a call from a collection attorney—word spreads quickly among your staff. Stress levels spike. Productivity drops. And people start looking elsewhere for a more stable employer. Lenders often will push you to the edge.

LENDERS WANT TO WORK WITH YOU
No MCA lender wants you to file bankruptcy. Lenders WANT to work with you. They want you to make payments – it’s better than suing you, and trying to connect you. If you speak to them, they will be reasonable and help you. Sometimes, an adjusted payment plan is enough to secure your employees’ confidence. Other times, business debt settlement is the best option.

IMPLICATIONS IN EVERY SITUATION POSSIBLE

1. Credit Score Deterioration: Future financing might cost more, reducing your ability to invest in employee benefits or expansions.
2. Potential Layoffs: Some business owners slash labor costs to free up cash, further destroying morale.
3. Stress on Vendor Relationships: If you miss vendor payments, supplies get delayed, halting production, and making employees question job stability.

AT DELANCEY STREET, WE ARE A TOP TIER BUSINESS DEBT RELIEF COMPANY
We focus on all types of unsecured business debt. Whether you owe merchant cash advances, SBA loans, or outstanding credit card debt—we can help you. Our team prides itself on establishing lines of communication with lenders immediately after you join our program, proactively explaining your financial challenges so you can keep your staff calm.

PENALTIES AND LAWS YOU SHOULD KNOW

• Confession of Judgment (COJ): Some lenders require a COJ, which can lead to immediate legal enforcement if you miss a payment.
• Regulatory Compliance: Failing to pay wages violates federal law under the FLSA, risking fines or lawsuits.
• State Laws Vary: Different states have different rules on business debt collection, so it’s crucial to understand your jurisdiction’s statutes.

HOW IT ALL GETS DISMANTLED 
Picture this: you’re dealing with multiple merchant cash advances, business credit cards, and maybe an SBA loan. One day, a lender files suit; you get a notice of default. Employees overhear your phone calls. Suddenly, half your employees feels uneasy and wants to quit. Fear of layoffs sets in. You scramble to piece together a payment plan while productivity suffers. Investors panic. Loyal customers hear rumors of financial distress. The whole system crumbles—quickly. Vendors won’t offer you credit anymore.

But it doesn’t have to end that way.

DEFENSE STRATEGIES: WHAT WE DO FOR YOU

1. Immediate Creditor Negotiation: We explain your situation, highlight cash flow issues, and aim to reduce the total debt so you can keep your employees on payroll.
2. Business Debt Settlement: By enrolling in our program, you can get reduced principal balances, extended payment terms, and lower interest rates—allowing you to focus on boosting employee morale.
3. Litigation Defense (If Needed): Our team of attorneys can step in if creditors escalate and file lawsuits. We’ll handle the legal issues, making sure you have time to reassure your staff. We take care of all the legal issues you might have.