Are you underwater, and having issues escaping a merchant cash advance? Many people work with brokers, and get several merchant cash advance loans stacked on them. It puts them into a potentially toxic situation
- They get charged high FEES by brokers and lenders
- They get charged high rates by lenders
- They got SEVERAL loans at once (known as “sandwiching”) which results in over-leveraged business owners
The thing is, when you learn the truth about what you signed up for it’s pretty obvious – you are screwed. On some days, you probably think about shutting down the business because it’s SO difficult to repay the business funding you took.
So what are your options of getting out of this merchant cash advance you took?
It’s not uncommon for business cash advance brokers to lie to you. It’s bad to generalize, but many brokers engage in sleazy practices, and lie. Many will take your information from a lead generation reseller, and will lie to you and say what they can to get you funded.
If you speak to a merchant cash advance lender, and he/she gave you an offer too good to be true…like the one below:
Loan type: short term
Term: 12 months
Then you probably fit into the category of business owners who got duped. It sounds too good to be true, right? Most merchant cash advance brokers simply can’t get you those rates from a cash advance lender.
There’s a reason merchant cash advance lenders exist.
They have capital
They want to make more than 5-15 APR
They are not interested in competing with banks
They get around usury laws, because they don’t give loans
So how do you get out of a merchant cash advance?
There’s a few ways you can get out of a cash advance. The most popular way of getting out of multiple merchant cash advance is by getting a merchant cash advance consolidation / business debt consolidation loan.
merchant cash advance consolidation involves paying off multiple loans, and then combining them into one loan.
With a merchant cash advance consolidation loan, you’ll be able to INCREASE the term, in order to reduce your daily payment and increase your cash flow. In addition, it might be possible to get a more FAVORABLE interest rate – which can help you save money over the long term of the loan. It’s not uncommon for a merchant cash advance consolidation to either save you money by lowering your interest rate, or improve cash flow by increasing the term of your loan.
What’s wrong with merchant cash advance?
IF it’s possible, you should try and get a term loan, or a line of credit, or a real estate collateralized loan, in order to get out of the merchant cash advance. It’s not uncommon for people to turn to traditional forms of financing in order to repay expensive merchant cash advances. Many merchant cash advances will sell you by saying “it’s only $250 a day,” and the thing is – when they make it seem so easy and digestible, it looks easy! But over the course of the month, that payment can be grueling and toxic.
What’s merchant cash advance stacking?
Many merchant cash advance brokers hurt your business by funding, simultaneously, multiple cash advances against your business in the same day. It’s typical for each advance to suck away 10% or more of your monthly revenue. But when you get 2, or more, cash advances it can be a spiral towards financial ruin.
If your business is going “under” you can ask the lenders to renegotiate and lower the daily payment
Lenders don’t want you to stop paying them. They are willing to work with you, and give you terms that make it easier for your business to survive. If you find yourself in a position where your business is suffering, and about to go bankrupt, it might behoove you to ask a lender for a favor and reduce your daily and weekly payments. It’s possible to ask a lender to reduce your daily payment by a significant amount. In some cases, it’s possible to stop payments for a few days, in order to “get back on your feet.”
Get out of merchant cash advance by replacing with a low rate term loan
If you have good credit, sometimes a monthly payment at a reasonable interest can dramatically reduce the financial burden on your business. It can turn multiple cash advances into a much more reasonable, monthly, loan. These monthly payment loans can go from 2-5 years, and have financing up to $500,000. Interest rates can go from 6% to 30%. One negative of switching to a low rate term loan is that you still need to pay the entire amount of your merchant cash advance. Virtually none of them allow you to avoid finance charges with early payments. It’s not uncommon for many businesses to file bankruptcy and hire bankruptcy lawyers in order to avoid paying back them.