We’re serious. We believe in our program so much we stand behind it with a money back guarantee for debt relief services. We are DelanceyStreet.com – a top tier business debt relief company. We have helped business owners, in a number of industries, get debt relief. Our focus? We help you negotiate a lower payment on a Merchant Cash Advance (MCA) so you can breathe again.
What Is a Merchant Cash Advance?
An MCA is not a traditional loan. It’s an advance on your future credit card sales, which can sound amazing when you need quick cash. But the bottom line is this: MCAs often come with sky-high factor rates, daily repayments, and serious potential pitfalls. The lenders claim it’s unsecured, but then they force you to sign personal guarantees.
Regardless of where your business stands, it’s crucial you understand the legal laws around MCAs before you negotiate. Because if you’re not careful, you could be signing documents which expose you to more liability than you ever imagined.
(Yes, it happens more often than you think.)
Are There Penalties and Laws Regulating MCAs?
Absolutely. Even though an MCA is unsecured, there are laws. These are not loans, so as a result, they’re considered a form of non-recourse lending by states. Unfortunately, lenders have done things secure their assets – such as having a personal guarantee in the contract, etc.
MCAs occupy a gray zone in finance, because they’re technically not loans. This means they might slip through the cracks of many state usury laws (which usually apply to interest-bearing loans). Still, some states challenge MCAs as disguised loans if the repayment terms cross certain thresholds.
- Potential penalties when you default on an MCA:
- Lawsuits or judgments for nonpayment
- Confessions of Judgment (COJs) which can result in swift legal action if you default on your MCA
- Personal guarantee enforcement, risking your personal assets, almost ovenight
- Breach of contract claims with significant damages
Visit FTC.gov (Federal Trade Commission) or the Consumer Financial Protection Bureau to see how regulators view small business financing done by MCA lenders. While they often focus on consumer transactions, they still publish guidelines which help you spot predatory practices.
Bottom line: Just because MCAs aren’t strictly governed by typical loan laws doesn’t mean you have zero legal protections. You also have SBA.gov to explore alternative funding solutions which can reduce your reliance on MCAs.
Negotiating a Lower Payment: Strategies and Considerations
1. Direct Conversation with the MCA Lender
Regardless of the size of your MCA debt, the first step is opening lines of communication with your MCA lender. Explain your business’s financial position. Remember: No lender wants you to file bankruptcy. They’d rather get some payment than nothing at all. If you can work out a payment plan, they’ll give you a temporary reprieve.
2. Emphasize Your Hardships
Show them your monthly cash flow statements. Demonstrate your distress. This can create the way for a new, reduced-payment schedule or even a partial forgiveness of the advance. It’s more than likely, without our business debt settlement company – all you can do is get a few extra days of lowered payments.
3. Provide a Lump Sum (If Possible)
Sometimes offering a portion of the balance as a lump sum can make a MCA lender to settle for less than the total owed. It’s all about leverage. If you have even a fraction of the funds available, you might negotiate a significantly lower payoff. This is not an unrealistic outcome. Lenders would rather take 60 cents on the dollar now, so they can put it back on the street for 150% interest.
4. Seek Professional Help
You can negotiate on your own. Or you can hire a business debt settlement company, like Delancey Street, which can apply negotiation tactics on your behalf. Our knowledge of MCA contracts can help you reduce the overall amount owed. Our money back guarantee makes it you’re not taking an uncalculated risk.
5. Consider a Debt Consolidation Loan
Yes, MCAs are short-term “solutions” which can quickly become nightmares if you’re not careful. A merchant cash advance consolidation or business debt consolidation loan might create a single payment with a more manageable interest rate.
Defense Strategy: How We’d Protect You
STEP ONE: Assess the Contract
Our team looks at your MCA documents to check for potential legal violations. Sometimes lenders slip in hidden fees, or interest rates so high they might be considered usurious under your state’s laws. We look for any shady language which could invalidate the agreement.
STEP TWO: Identify Pressure Points
If you’ve signed a confession of judgment, your lender has a tool to instantly seize your assets. But we can still argue issues like:
- Improper notice requirements
- Non-compliance with local procedural rules
- Unlawful interest cloaked as a factor rate
STEP THREE: Open Lines of Communication with the Lender’s Legal Team
We talk lawyer to lawyer if needed (our sister law firm steps in). We highlight your business’s constraints, potential counterclaims, and possible defenses. We push for an installment plan or partial forgiveness. Lawsuits cost them money. If you file bankruptcy, then it’s over for the lender. Lenders would rather a partial payment.
STEP FOUR: Shield You from Lawsuits
If a lawsuit’s already filed, we can challenge the contract terms, question the validity of the MCA arrangement, and explore any breach of good faith or unfair trade practices. (Check NY.gov, for example, to see how some states handle “disguised loans” under usury statutes.)
STEP FIVE: Get You Breathing Room
Finally, we negotiate a formal agreement which reduces your monthly payment, lowers total owed, and avoids litigation. In some cases, we might even get them to stretch out the repayment, or waive certain fees.
How Could This All Get Dismantled?
You’ve got four MCAs stacked back-to-back. Your daily withdrawals are crushing your cash flow. You’re about to miss payroll. The MCA lender threatens legal action. Then you find out your contract might be characterized as a loan under your state’s laws—meaning the sky-high rates could be deemed criminally usurious.
If the MCA “advance” was actually an illegal loan, you have a defense. That might dismantle the entire debt or slash it. This is the kind of inside-out legal unraveling which can happen when a business debt relief company (like us) raises the right arguments and fights for you. We see situations where improper MCA terms break up under legal scrutiny, forcing the lender to settle for a fraction of what they demanded.
But you have to act fast, or risk default judgments, bank account garnishments. It’s important to consult with an experienced attorney or a top-tier business debt relief company.
(This is where we come in.)
Why Delancey Street Is the Better Choice
Significant Debt Reduction: Our team negotiates many MCA debts down by 50-70%.
Expert Team: You get a dedicated Debt Settlement Advisor plus attorneys who understand the nuances.
Proven Track Record: We’ve successfully aided hundreds of business owners, preventing bankruptcies and lawsuits.
Money Back Guarantee: Yes, money back guarantee. If we can’t help you, you don’t pay. Period.
We Want to Help You Right Now
We’re top-tier for a reason. We take a holistic approach—looking at your entire debt load, from credit cards to SBA loans, to see how everything connects. If your business is drowning in MCA debt, fear not. There are ways out. You just need the right team by your side.
Contact us at DelanceyStreet.com if you want:
- A free initial consultation
- A thorough review of your MCA agreements
- A tailored defense strategy
Remember: We’re all about results. We handle the phone calls, the legal forms, the negotiations. You handle your business. Our goal is to help you get the best outcome.
At the end of the day, every MCA lender wants to get paid. But they’re often willing to do so on better terms—if you know how to ask and have the right attorney.
Essential Legal Note
This article is for informational purposes only and does not create an attorney-client relationship (which requires a separate agreement). Every situation is unique. We encourage you to review government resources like the FTC’s official site or the Consumer Financial Protection Bureau if you have more questions about small business lending practices. Always consult an attorney in your jurisdiction to get personalized legal guidance. We are here to help you.