Merchant cash advances (MCAs) are often used by business owners who were hoping to grow; or perhaps they needed a life line. But for many businesses in NYC, they quickly become impossible to keep up—especially when multiple lenders start pulling daily payments from your bank account. At Delancey Street, we focus on helping you manage these obligations before they cause further problems, and the monthly payments can quickly drown you in debt!
Many of our clients never expected to face default, but they soon realized they couldn’t keep up with overlapping MCA payments. Suddenly, a routine bank deposit isn’t enough for payroll, which led to strained relationships with creditors and vendors. Worse, most MCA contracts come with a COJ – confession of judgement – which can be used immediately if you default, effectively allowing the lender to go straight to court without warning—freezing your accounts, garnishing funds, and applying fees that push your debt even higher. That’s why it’s important to understand exactly what you signed and what your legal options are, especially here in NYC, where COJs are commonplace.
In some cases, the MCA structure itself might be a potentially complicated process. We’ve seen factor rates that look suspiciously close to usury, especially when the effective interest rate goes above what’s allowed under N.Y. General Obligations Law. The courts scrutinize the true nature of these transactions: if a lender oversteps, you might have a defense. Meanwhile, if you’re behind on daily payments, that MCA provider could push for an immediate judgment. Understanding how merchant cash advance debt can lead to serious repercussions is crucial for any NYC business owner.
-If you let your MCA obligations pile up, you may be at risk of going out of business. But before you assume your lender it’s probable that they will be reasonable and help you, it’s best to initiate a real dialogue about restructuring your payments. One approach is to use a consolidation loan, which leaves you with just ONE monthly payment instead of multiple MCA debits. Consolidating your debts can help you manage your debts, and also results in a lower overall interest rate.
When One merchant cash advance leads to another. Pretty soon your cash flow is crushed. That’s the moment you need to think about your options. Some business owners look into direct negotiation with each MCA provider, showing them updated financial statements and a clear plan. By using your up-to-date balance sheets and cash flow statements, we can identify potential issues that might strengthen your negotiating position. If you find yourself in a difficult position, and you’re having trouble paying your MCAs, seeking professional debt settlement help might be the right move.
When you show proof of your cash flow struggles, many lenders are happy to set up a payment plan that’s adjusted so your business doesn’t suffer. In our experience, they do this because they recognize a lawsuit can be costly, and they’d rather see a workable repayment arrangement than an outright default. While debt settlement can be a good option for some, there are many potential drawbacks—so it’s important to tailor the solution to your specific situation.
At Delancey Street, we also help you evaluate more extreme measures if necessary. Debt can be fixed. But if you’ve taken on multiple MCAs with enormous daily draws, it’s crucial to avoid the practice of stacking merchant cash advance loans, which can quickly sink a business. If you’re consistently behind on payments, then that debt is toxic, and it’s impossible to keep up. Ultimately, every lender wants to get paid back rather than see you file bankruptcy. That’s why you might have more leverage than you realize. Creditors often negotiate principal reductions or extended terms once they see you truly can’t keep up with the pace of repayment.
-Finally, the decision to restructure, consolidate, or even file bankruptcy comes down to your specific situation. If you do nothing, you risk wage garnishments, bank account freezes, and serious legal battles. But if you address your MCA debt quickly, you can often avoid going out of business. And that’s what we at Delancey Street aim to help you do. We dive deep into your financial statements, your lender agreements, and your available cash flow to create a strategy that gets you on the path to recovery.