Looking for business debt relief services? Visit Delancey Street.
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Merchant Cash Advance Business Debt Relief
Merchant cash advances (MCAs) can provide quick access to capital for small businesses, but they also come with high costs and risks. If your business has struggled to repay an MCA, you may be facing aggressive collection tactics or threats of legal action. However, there are options to resolve MCA debt and protect your business.
How Merchant Cash Advances Work
A merchant cash advance provides a business with a lump sum of capital in exchange for a percentage of future credit card sales. It is not technically a loan, so MCA companies can bypass state lending laws and charge higher fees.Here’s a quick rundown of how merchant cash advances work:
- You receive an upfront sum of cash, usually between $5,000 – $500,000
- The MCA company takes a fixed percentage of your daily credit card sales – typically 8-20%
- You make payments until you pay back the advance plus fees, which often equates to an APR between 60-400%
This high cost of capital makes MCAs risky for small businesses. If sales decline, you still owe daily payments based on the fixed percentage. Many companies quickly fall behind and end up owing double the amount they originally received.
The Risks of Merchant Cash Advances
While MCAs provide fast access to capital, they come with considerable risks:
- Extremely high APRs – MCA fees equate to APRs of 60-400%, much higher than business loans
- Daily payments – You owe payments every day regardless of actual sales
- Aggressive collections – MCA companies can debit business accounts without warning
- Personal liability – Owners often personally guarantee repayment
As a result of these risky terms, the MCA industry sees very high default rates of 30% or more. If your business has defaulted, you may already be facing aggressive tactics like bank account sweeps, threats of legal action, or lawsuits.
Seeking Merchant Cash Advance Debt Relief
If your business is struggling with MCA debt, know there are people who can help. Seeking professional assistance can help you:
- Stop collections activity – Legally require the MCA company to cease collections
- Consolidate multiple debts – Combine everything into a single monthly payment
- Lower monthly payments – Through interest rate reductions or extended terms
- Settle debt – Resolve MCA debt for less than the full balance
- Improve cash flow – Keep more revenue to operate the business
- Avoid bankruptcy – Explore alternatives before resorting to bankruptcy
How We Approach Merchant Cash Advance Debt Relief
Our financial consulting firm provides customized debt relief solutions for small businesses struggling with MCAs. Here is an overview of our process:
1. Free Consultation
We will conduct an in-depth review of your business finances to gain clarity on the full scope of debts owed. This allows us to provide specific advice tailored to your unique situation.
2. Strategic Plan
Next, we develop a customized strategic plan to address the MCA debt through settlement negotiations, debt consolidation, or restructuring. The goal is to relieve financial pressure and improve cash flow.
3. Implementation
We then implement the strategy through direct negotiations with MCA providers. With our leverage and experience, we can often achieve much better results compared to the business owner negotiating alone.
4. Ongoing Support
Even after resolving the immediate MCA debt, we provide ongoing advisory support to ensure your business remains financially healthy. This includes cash flow optimization, budgeting, capital planning and more.The key is addressing MCA debt strategically with the leverage required for the best possible terms. By working with a specialist, you can resolve debt faster, reduce balances, and avoid further collection harassment.
Options for Merchant Cash Advance Debt Relief
There are several potential options to address outstanding MCA debt:
Debt Settlement
With professional representation, you can often settle MCA debt for $0.30 to $0.50 on the dollar. This legally eliminates the debt at a steep discount. Settlements typically require a lump-sum payment, which we can structure using business loans or investor capital.
Balance Reductions
For viable businesses with strong financials, investors may agree to reduce MCA balances by 20-60% in exchange for a stake in the business via equity financing. This simultaneously lowers debt and provides growth capital.
Payment Reductions
Through negotiations, consolidation, or restructuring, the total monthly payment owed across multiple MCAs can often be reduced significantly. This improves cash flow while continuing to pay down the debt.
Extended Terms
Extending the original MCA repayment term means lower monthly payments over a longer period. This helps cash flow at the expense of increased total interest paid.
Credit Arbitration
In some cases, violations of lending laws provide opportunities to invalidate MCA debt through arbitration proceedings. While not all cases qualify, this can legally discharge debt.
Key Takeaways
The key takeaways about merchant cash advance debt relief include:
- MCA debt is extremely risky – With high costs and aggressive collection tactics, struggling businesses need help.
- Customized solutions are available – Professional assistance can help negotiate settlements, interest rate reductions, or improved repayment terms.
- Specialists get far better results – Leveraging experience and negotiating power is key to resolving MCA debt effectively.
- Time is of the essence – The sooner you address outstanding balances, the easier it is to find a reasonable solution.
About DeLancey Street
DeLancey Street is a specialty finance consulting firm representing small business clients. We are experts in merchant cash advance debt relief as well as growth funding, credit arbitrage, investor relations, and strategic planning.With extensive experience across thousands of client engagements, our team can quickly assess your situation and develop a customized game plan to strengthen the financial position of your business.If you have any questions or would like to discuss your business’ financial options, please reach out for a free consultation. Our passion is helping entrepreneurs succeed through informed capital strategies.
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