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Suffocating Under Merchant Cash Advance Debt? Explore These Options

Merchant cash advances can be a tempting source of quick capital for businesses – but they often come at a steep price. With outrageous factor rates and rigid repayment schedules, these cash advances ensnare many merchants in inescapable debt traps. If you’re choking under the crushing burden of an MCA, take a deep breath: this article outlines potential paths forward to find relief.

Understand the Beast You’re Fighting

Unlike traditional loans which charge simple interest, merchant cash advances rake in profits through factor rates – those deceiving multiplication factors that make the payback amount exponentially higher than the cash advance amount.

For instance, let’s say you desperately took a $50,000 advance with a steep factor rate of 1.4. That means you’ll owe a gut-punching $70,000 – plus fees – whether you pay it back in 3 months or 3 years. The repayment schedule is automated and non-negotiable: miss too many payments and you’re at the mercy of aggressive debt collectors and potential legal action.

Escaping Quicksand: Potential Debt Relief Strategies

Renegotiate with the Merchant Cash Advance Company

Yes, it’s an uphill battle with these notoriously stubborn companies. But if your business has been impacted by circumstances beyond your control, many MCA providers are open to renegotiating terms or accepting lump-sum settlements to recover at least a portion of their investment.

Be forewarned: this avenue often requires hefty documentation and air-tight arguments justifying your business hardships. Consulting an experienced debt restructuring attorney can dramatically improve your chances of striking a more manageable deal.

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Debt Consolidation and Refinancing

By consolidating or refinancing high-interest MCA debt into an affordable, fixed-rate loan, businesses gain breathing room and a light at the end of the tunnel. However, poor credit and cash flow issues can severely limit this path.

That’s where alternative lenders like Become come in: they specifically cater to merchants with cash advance burdens, providing consolidation loans based on future receivables rather than solely depending on arduous credit requirements.

Bankruptcy: A Scorched-Earth Measure

For merchants drowning in MCA debt with no other options, bankruptcy may be the only remaining lifeline. Both Chapter 7 (asset liquidation) and Chapter 11 (reorganization) can potentially discharge merchant cash advance obligations.

However, the immense long-term ramifications of bankruptcy can’t be overstated. Consulting a seasoned bankruptcy attorney is absolutely critical before deciding to pursue this nuclear option.

Stop Perpetuating the Vicious Cycle

Avoiding future predatory lending pitfalls is crucial for struggling businesses barely keeping their heads above water. Merchant cash advance companies notoriously entrap borrowers in perpetual refinancing loops – making desperate merchants accept staggering new advances to cover existing unaffordable payback amounts.

This vicious debt cycle must end. Consider all other financing avenues before ever resorting to another cash advance, even when the pressure is on. Explore investor loans, inventory financing, lines of credit, invoice factoring – any option with transparent, reasonable costs and terms.

Taking that First Step Towards Relief…

We understand – asking for help is daunting when trapped under a mountain of confusing debt. But don’t resign yourself to an inescapable MCA sentence. Explore all your options, assemble a solid advisory team, and chart a path towards financial fresh air.

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Because no business owner should have to indefinitely gasp for relief. Take that first step today – your future buoyancy depends on it.

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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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$500,000 MCA Restructured Over 3 Years
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$250,000 SBA Loan Offer in Compromise
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$350,000 MCA Restructured Over 2 Years

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