Chat with us, powered by LiveChat

How To Restructure Merchant Cash Advance Debt

Merchant cash advances can seem like an easy fix when your business needs fast cash. But those quick funds can turn into a big burden when it’s time to pay back the advance. If your business has taken on more merchant cash advances than it can handle, you may need to restructure the debt to avoid default.Here’s what you need to know about merchant cash advance debt and how to restructure it:

What is a Merchant Cash Advance?

A merchant cash advance (MCA) works differently than a traditional small business loan. With an MCA, a funding company purchases a portion of your future credit card receipts at a discount.For example, they may give you $100,000 upfront in exchange for $130,000 of your future credit card sales over the next 18 months. That extra $30,000 represents the fee you pay for the advance.You’ll pay back the advance in daily or weekly installments as a percentage of your credit card receipts. These payments are automatically withdrawn from your bank account – usually around 10-20% of your daily credit card sales.The cost of an MCA is very high compared to other financing options. The fees and payment structure essentially make it a very high interest rate loan.

- -

Know Your Merchant Cash Advance Details

Before attempting to restructure your MCA debt, take time to understand all the key details:

  • Original advance amount
  • Payback percentage deducted from credit card sales
  • Total repayment amount owed
  • Remaining term length
  • Prepayment penalties or other fees

You’ll need this info to determine if restructuring makes sense for your situation. The goal is to reduce the payback burden to a manageable level for your business.

Consolidation Can Lower Fees

If you have multiple merchant cash advances outstanding, consolidation may help. This involves combining all the agreements into one new advance with lower fees.While it doesn’t reduce the total amount owed, consolidation can provide some immediate financial relief by lowering your daily repayment percentage. Just be sure to read the fine print for any prepayment penalties on your existing advances.

Negotiate With Your MCA Company

Once you’ve analyzed your situation, it’s time to negotiate for relief. Don’t expect your MCA company to voluntarily offer better terms – you’ll likely need to make the first move.Here are some options to discuss:

- -
  • Lower the percentage deducted from daily credit card sales
  • Extend the repayment term to reduce immediate burden
  • Waive any prepayment penalties if refinancing with a lower-cost loan

The MCA company faces disincentives to help you since they already provided the lump sum upfront. Be prepared for some resistance. But calmly explain how the current terms will force you into bankruptcy, which is a worse outcome for them too.

Get Debt Relief Today

Delancey Street is here for you

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.

"Super fast, and super courteous, Delancey Street is amazing"
$500,000 MCA Restructured Over 3 Years
"Thanks for helping me in literally 24 hours"
$250,000 SBA Loan Offer in Compromise
"Great choice for business owners who need a trustworthy partner"
$350,000 MCA Restructured Over 2 Years

In The Media

Delancey Street CEO discusses ways to reward employees
Delancey Street CEO discusses the benefits of franchising on Forbes.
Delancey Street CEO discusses management on AMEX.
Best Michigan Business Debt Counselors

Best Michigan Business Debt Counselors Navigating the choppy waters of…

Best Michigan Financial Advisors

Best Michigan Financial Advisors Choosing the Right Financial Advisor in…

Best Michigan Bankruptcy Lawyers

Best Michigan Bankruptcy Lawyers Navigating the choppy waters of bankruptcy…

Best Michigan Turnaround Management Firms

Best Michigan Turnaround Management Firms Introduction Navigating financial distress and…

Best Kansas Turnaround Management Firms

Best Kansas Turnaround Management Firms Introduction to Turnaround Management Firms…

Delancey Street simply gets it. You're talking to experts.
Steven Norris
Get Help Today

Ready To Get Started?

If you have questions, feel free to shoot us an email, or fill out our live chat.

Schedule Consultation