Struggling with debt?

HOW TO PREVENT DEFAULTING ON MERCHANT CASH ADVANCES

Delancey Street protects and defends business owners nationwide, from merchant cash advance lenders. If you’re struggling, and need help getting out of a predatory MCA loan, we can help.

AVOID LAWSUITS
Have you heard about the serious trouble you can face if you miss payments on a merchant cash advance? Regardless of whether you’ve got just one MCA or several MCAs stacked on top of each other, there’s a substantial risk. Defaulting on an MCA can push the lender to freeze your bank accounts or even TAKE YOUR WAGES. That’s why it’s essential you learn how to prevent default on a merchant cash advance.

AS SEEN ON major media outlets, Delancey Street is a PREMIER, award-winning business debt relief company. We specialize in helping small business owners avoid financial problems due to predatory MCA’s.

Prevent Defaulting: Step-by-Step
We want to make it super straightforward. Here’s how we recommend you protect yourself from defaulting:

1. Read the Fine Print
   Many merchant cash advance agreements have hidden fees or hidden clauses. Some include a confession of judgment (COJ), which allows the MCA provider to go to court and get a judgment against you without your knowledge. This can mean you literally default, and lose your bank account, and other business assets, immediately. 
   We get it. Fine print is a headache. But reading (or having an attorney read) every last line is critical.

2. Stay in Communication with Your Lender
   Regardless of whether you’re short on cash, talk to your MCA provider. We can help you reach out and negotiate a short-term payment plan. Most lenders would rather work with you than push you into default and potentially get nothing.

3. Track Your Cash Flow Daily
   Merchant cash advances take a part of your daily credit card sales. Make sure you always have enough sales to cover the deduction. If your daily deposits ever slip, talk to the MCA provider immediately. You don’t want to be in a position where you’re considered a default.

4. Have a Backup Plan
   It’s not uncommon for businesses to run into slower months. If you notice your cash flow dropping, consider invoice factoring, a line of credit, or a debt consolidation loan.
   For more info on business debt solutions, see the U.S. Small Business Administration’s guidelines at https://www.sba.gov.

5. Consider Debt Consolidation
   Many business owners fall into the trap of stacking multiple MCAs. It leads to never-ending debt, and there’s no way out. A business debt consolidation loan can combine all your debts into a single, more manageable payment, helping you avoid default altogether.

6. Cut Costs ASAP
   Look at your current expenses and see if you can reduce them. Cancel non-essential subscriptions, negotiate with suppliers, and keep overhead as low as possible. Sometimes you just have to push hard on the brakes.

7. Consult with a Legal Team
   Merchant cash advance providers can get aggressive. Regardless of the lender, if you’re at risk of default, talk to an attorney right away. We have attorneys on staff—this can help you avoid a lawsuit and major penalties.

Penalties and Potential Laws
Defaulting on a merchant cash advance can lead to:

• Immediate Legal Action
  Some MCA agreements allow the lender to sue you the second you miss a payment. Visit the Federal Trade Commission at https://www.ftc.gov to learn more about unfair or deceptive lending practices.

• FREEZING Your Bank Accounts
  Because of the confession of judgment clauses in many MCAs, lenders can often get a court order swiftly, and then freeze your accounts.

• Taking Your Wages
  If you signed a personal guarantee, you might face personal liability and this can result in your personal assets being seized. This means they can TAKE YOUR WAGES or seize personal assets.

• Damaging Your Credit
  Your business credit and possibly your personal credit can take a serious hit. It can ruin your chances of getting better financing later. This is a big issue, if you ever need business funding.

LEGAL INFORMATION
Merchant cash advances aren’t regulated like typical business loans, but there are still federal and state laws preventing predatory practices. The Consumer Financial Protection Bureau (https://www.consumerfinance.gov) discusses various forms of small business lending oversight.

• Interest Rate Caps: Some states have usury laws capping interest rates, but many MCA providers claim these rules don’t apply to them since an MCA is technically an “advance” on future revenue.
• Personal Guarantees: Once you sign a personal guarantee, your personal assets could be fair game in the event of default.
• Confession of Judgment: This is legal in certain states, but heavily scrutinized. Courts in some jurisdictions are beginning to invalidate them.

POTENTIAL DEFENSE STRATEGIES
Regardless of the situation, we can help you defend against MCA lawsuits or potential defaults. Here are a few strategies Delancey Street might use:

• Check for Unconscionable Terms
  We investigate if the MCA contract terms are one-sided or if the factor rate is so high it’s borderline predatory. Courts have invalidated some MCAs for these reasons.

• Verify the Confession of Judgment
  Some lenders try to use a COJ in states where it isn’t recognized. We fight to invalidate confessions of judgment if they violate local law.

• Question the Lender’s License
  Certain states require MCA providers to be licensed. If the lender operated illegally, we might move to dismiss the entire lawsuit.

• Negotiate a Settlement
  Lenders want to get paid. Often, if your business is heading toward default, the MCA provider will accept a lower balance or extended terms rather than go to court. We handle negotiations so you can focus on running your business.

• File Counterclaims
  If the MCA provider engaged in illegal or deceptive practices, we can file counterclaims. This can shift leverage to you in negotiations.

“DELANCEY STREET SAVES A BUSINESS OWNER OVER $400,000.”
We’ve seen success stories like this over and over again. We walk in, review the entire MCA situation, negotiate or litigate aggressively, and end up reducing the debt significantly.

WE DEFEND. WE NEGOTIATE. WE WIN.
Regardless of whether you’re just starting to feel the crunch or you’re already in default, Delancey Street is here to help you. We take pride in preventing businesses from drowning in MCA debt nationwide. Do not wait; reach out to our team of lawyers today for a risk free consultation