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Merchant Cash Advance & Business Loan Relief

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Since the recession hit, there are many small businesses that have found it difficult, if not impossible, to acquire loans from traditional banks and lenders. Unfortunately, they still needed capital for day-to-day expenses, and many smaller businesses found they were really struggling if they could not find the needed financing. Similar to households across the country, if your business is tight on cash, you may get desperate. Modern, alternative lenders not only know this, but they take advantage of it. This is usually when an MCA lender will show up. This for-profit company makes promises of fast approval, easy qualifications, and no issues related to bad credit. It is important to note that this type of advance is not considered a loan. That is because of how it is structured. Essentially, the MCA is the equivalent of a payday loan, but for businesses.



What is a Merchant Cash Advance?
​MCA loans allow your business borrow against its future earnings. These are different than other types of small business loans for several reasons. For example, collateral is not usually required to get a MCA. In some situations, this means you can receive the needed funds in 24 hours or less. While all that may sound good theoretically, these loans are unregulated, which means many of the lenders in this industry use predatory tactics that can be devastating to small or newly established companies.

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Businesses and MCA Loans

 MCA's are popular options for businesses that may not be qualified for other business financing options. That is because they do not require all the “red tape” of other loans. This makes them extremely appealing to businesses with bad credit, no history, or other issues that prevent it from acquiring a different loan. Instead, the cash advance will be repaid based on the daily sales of the business. Factors like total time in business, daily sales, and others will determine the cash advance amount, which means that there is no real consideration regarding your ability to repay. As COVID-19 has proven, things may be fine today, and financially devastating tomorrow. You can’t get yourself in a financially compromising situation, which is something that happens often for businesses that choose to go the MCA path. If your startup has strong daily sales, then the cash advance may be an appealing option if you are in need of a fast source of capital. Unlike other unsecured business loans, a business does not have to have impeccable credit or assets to use as collateral. These are a few of the reasons this type of lending has become so popular. Unfortunately, it is these reasons that many have defaulted on an MCA and why they can be so dangerous

Understanding Repayment for a Merchant Cash Advance Loans
According to MCA law, the loan is repaid based on your day to day sales amount. Depending on the way that the cash advances are financed, your lender will receive a percentage of your daily credit card sales or a percentage of your total business sales. This means you are repaying this loan each day. The terms for these cash advances will vary from one lender to another, which is why it may be smart for you to speak with a merchant cash advance attorney before signing anything. After all, you do not want to fall victim to predatory lending practices, which is all-too common in this industry. The lawyer can help you find other options that may be better for your business.

The Qualification Process for a Merchant Cash Advance
To qualify for these merchant loans, there are some requirements you must meet. While this is true, the actual funding process is much faster than other loans. That is because there is no type of regulation on the lending practices. Essentially, this means the lenders can do whatever they want, which may wind up financially devastating to your business. In most cases, you will need to provide four to six months of past receivables or bank statements and fill out an application from the lender you choose. When you choose to get a MCA, it means you get to skip the mountains of seemingly endless paperwork, risking your business’s collateral, and avoiding the damaging effects of a credit pull. While all this is appealing too, it further highlights how this industry is unregulated and shows how the outcome may be dangerous and costly.

Understanding the Biggest Issues with Merchant Cash Advance Companies
The main issue with MCA's is that they are typically not very transparent regarding the amount of money they are really going to cost you. There has been an array of studies done on these practices and all of them have shown how damaging this lending product may be, or what happens when you default on a merchant cash advance. Along with getting stuck with very high interest rates and a plethora of hidden fees, there are some MCA lenders that may require you to sign a COJ – Confession of Judgement. The COJ is one example of how these companies are trying to trick you. If the lender makes it a requirement for you to sign the COJ before they give you any funds, this should be a huge red flag. While not all lenders that require you to sign this will drain your bank accounts and call you with threats, but if you do sign it, you are essentially giving them the ability to seize your assets with no warning. More dangerous aspects of these type of loans are Bank Restraints and UCC Liens. Even though taking out an MCA may seem like a smart option for financial needs that are occurring right now, the actual cost of the hidden fees and the misleading wording isn’t always worth it.
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New Relief Options for Struggling Small Businesses
​While the government has always been a proponent of small business owners, with the COVID-19 pandemic, there are now even more options for relief that will help your business avoid some of the more potentially damaging options that are currently available. Some of the options that you may be able to qualify for include:

PPP – Paycheck Protection Program
These are federally backed loans provided by traditional lenders to help businesses offset their expenses. Specifically, this loan is designed to cover payroll costs. It can also be used for mortgage, utilities, rent, and interest.

EIDL – Economic Injury Disaster Loan
These can be accessed through the SBA. The loans were created to help your business recover from the potential economic setbacks that are created by various disasters, which includes COVID-19.
EIDL Emergency Grant
You can receive this for an emergency advance of up to $10K when you have applied for an EIDL.
SBA Loan Forgiveness
With this option, it is possible for you to forego some payments on specific portions of your SBA loans for a certain amount of time.


Alternatives to Business Bankruptcy


Do You Need Help with Loan Relief and Your Options?
If you are in a situation where you need assistance with unsecured business loans or merchant cash advance relief and do not know what to turn, we are here to help. Even if you are experiencing merchant cash advance legal issues or in danger of a default on a merchant cash advance. Our team can provide you with helpful advice that will ensure you do not suffer issues that are financially devastating to your business. Remember, business loan relief or merchant cash advance services may not be something that all businesses qualify for, but if you are dealing with predatory lending practices and are in a financial jam, then speaking with us is one of the smartest things that you can do. Our merchant cash advance attorneys can evaluate your situation and help you figure out the options that are available.

Your Business Does Not Have to Suffer
​When it comes to your business and predatory lending practices, you have to remain aware and ensure that you take the steps to protect yourself, your business, and your assets. If you need assistance with this, we can answer any questions that you may have. Merchant cash advance relief is here! Ready to learn more? If so, contact us today. We will review your current financial situation and ensure you are taking the right financial steps to ensure the ongoing success of your business. There are options you can use to protect your business and ensure your long-term financial health. Speak to us to learn more about these practices and to find an option that will suit your business wants and needs. With this information, you will be on your way to creating a financially strong business. 


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News

MCA Default

5 Risks Involved When Defaulting on Your Merchant Cash Advance Loan

By MCA Defense Admin • January 13, 2021
Risks Involved When Defaulting on Your Merchant Cash Advance
MCA Attorney

How to Relieve MCA Struggles With a Merchant Cash Advance Attorney

By MCA Defense Now Admin • January 5, 2021
Business owners must ensure that their businesses run smoothly and with proper capital. For that reason, many of them take up a "merchant cash advance" to offset some early costs. This can, however, put many people in serious debt on occasion. In that situation, having a dedicated merchant cash advance attorney on your side can really help with problems you may face. Many people do not know quite how an MCA lawyer can help them with the problems merchant cash advances can bring. So below are five ways an MCA attorney can directly assist you in resolving issues you may have. What Is a Merchant Cash Advance? For those who do not know, a merchant cash advance is a specific method of attaining capital to start a business. It is also used to offset sudden debts. It allows a trader to either get an upfront loan in exchange for a portion of future credit and debit card sales. Alternatively, you can get the same loan and repay it via direct daily or weekly debits. The history of merchant cash advances is heavily tied to companies who attain most of their revenue from credit and debit card sales. In recent times, other businesses have had access to them. This has meant their problems have grown as merchants make use of this lending scheme. These advances have allowed many merchants to get started with their business quickly. But in recent times, due to the coronavirus, the number of businesses getting into trouble over the loans has skyrocketed. This is where a merchant cash advance lawyer can step in and prevent the problems from getting worse. 1. Get a Merchant Cash Advance Attorney to Prevent Harassment Merchant cash advance lenders can be extremely aggressive in their marketing. This tenacity does not stop once an individual has attained an advance, however. Once someone misses a payment, the lenders regularly follow up on the missed payments with impunity. In a worst-case scenario, a trader may have signed a “Confession of Judgement” as part of the process. Such a confession allows lenders to seize assets even when no default has occurred. This leads to confusion and further problems for the person who has borrowed the money. Alternatively, a default may have occurred, and the lender may be following up, despite the situation not yet calling for such action. An MCA attorney can help you by first reading over your contract and advising you on your legal options. After this, they may be able to apply various legal methods to prevent the lenders from harassing you. At the very least, they may be able to offer support with how the law can help protect you in the long-term. 2. Unfreeze Your Accounts It may be that you find your payment processing accounts have been frozen. In this situation, an MCA attorney will be able to look at your contract with your payment regulator. With this knowledge, they will be able to define the easiest way to unfreeze the accounts. If the accounts are not yet frozen, a merchant cash advance lawyer should be able to give you some advice. You will then be able to avoid this in the future. Taking action before a problem occurs is always a good idea. A qualified individual can put you in the best position to do so. 3. Reduce Payouts When Talking About Your MCA You should be aware of the difference between payouts and interest. If your payouts are set at 20%, this does not mean a monthly or yearly increase to what you have been lent by 20%. That is interest. Instead, it refers to the percentage of your future sales that will go toward paying for the loan. This confusion can lead to overly aggressive — or inappropriately low — payouts. Should either happen, you will want to go back to the lender and discuss how you can both adjust the contract for everybody’s benefit. With an MCA lawyer on your side, you will have the legal know-how and ability to get to the negotiating table. Acting in your best interest, the attorney can approach your lender and discuss alternative options. Through this, they will be able to ensure you can repay the advance while also maintaining your business. 4. Negotiate Interest Rates When talking about your contract, you may find that your payouts are just fine. Instead, you might discover your yearly interest far outstrips what you can provide. Similar to reducing payouts, an MCA law firm can discuss the finer points of a contract on your behalf. Should you find your interest rates are too high, they may be able to define a new contract that works for you. You need not worry about inflating interest rates, or them changing without your permission. 5. Restore a Damaged Reputation Through the actions of a lender, you may find that others in your community start to distrust you. They may besmirch your ability to save money or make other inappropriate comments. This is not your fault and may even be a case of the lender engaging in slander or libel. This is definitely something you should mention to an attorney. A qualified merchant cash advance attorney can discuss with you what slander and libel are. They can then discuss issuing cease and desist letters if necessary, among other options. They will act according to your instructions after you understand the pros and cons of the decision. We Can Help There are a great many merchant cash advance attorney firms around. All of them will give you slightly different advice, depending on their expertise, and can either be a good or bad fit for you. Fortunately, we can help you trawl through the options. You can pick a firm with the right attitude and experience to help you ensure your business's safety going forward. Simply send us a message or give us a call and we will take the time to get back to you quickly.
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