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Finding Relief from MCA Business Debt

Business owners across the country have found themselves struggling with merchant cash advance (MCA) debt. These short-term, high-interest loans can quickly spiral out of control, leaving companies fighting just to make the daily payments. However, there are solutions available to find relief from MCA debt and get your business back on stable financial ground.

Understanding Merchant Cash Advances

A merchant cash advance provides a lump sum payment to a business in exchange for a percentage of future credit card sales. This type of financing appeals to many small business owners because:

  • There is no lengthy credit check – MCAs focus more on credit card sales history versus personal credit scores. This allows newer companies access to working capital.
  • Funds can be accessed quickly – You can typically get an MCA funded in as little as 24-48 hours.
  • Payments adjust with sales fluctuations – If sales go down one month, your daily repayment goes down.

However, MCAs also come with their downsides:

  • Extremely high effective interest rates – Rates can routinely exceed 100% APR when all fees are calculated.
  • Large daily repayments – MCA companies can claim 10-20% of daily credit card sales towards repayment. This significantly cuts into operating capital.
  • Personal guarantees – Most MCA contracts require a personal guarantee from the business owner. This leaves your personal assets at risk if the MCA goes unpaid.

As a result of these issues, many businesses get caught in the following cycle:

  1. Take out an MCA to bridge a temporary cash flow gap.
  2. Struggle with large daily payments, taking capital needed to grow sales.
  3. Revenue stagnates or declines under repayment strain.
  4. More MCAs are taken out to cover operating expenses, driving repayments even higher.
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This repetitive cycle can leave companies owing $100Ks in MCA debt with no clear path out.

Finding the Right Solution

If your business is caught in an endless cycle of MCA debt, know there are ways out. But not all solutions produce the same results.

Debt Consolidation

Some advisors may push debt consolidation loans to repay what’s owed. However, this option has considerable downsides, including:

  • Refinancing doesn’t reduce what’s owed – You still have to repay the full balance, just under different terms. This does little to resolve the underlying cash flow issues.
  • Monthly payments may not go down – If you stretch a payoff period from 2 years to 5, the monthly payment may go up due to a lower principal curtailment.
  • Personal assets remain at risk – With a consolidation loan or line of credit, your personal guarantee likely still backs the debt.

While consolidation can provide short-term payment relief, it won’t permanently resolve unsustainable MCA debt.

Debt Settlement

A more viable solution is working with a business debt settlement firm. These companies negotiate directly with your MCA lenders to reduce what’s owed. This path can completely resolve MCA debts and includes notable benefits like:

  • Permanently lowered balances – Lenders may agree to settle for 40-60% of what’s currently owed. This creates substantial savings.
  • Payments based on ability – New payment plans align with your current sales volumes and cash flow. This prevents another cycle of over-borrowing.
  • Personal guarantee release – Settling MCA debts can lead to a full release of previous personal guarantees. This protects your personal wealth going forward.
  • Improved cash flow – With balances reduced by up to 60% and sustainable payments, more working capital can go towards growth.
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However, the debt settlement path can take 3-12 months to complete. It also requires specific expertise negotiating MCA payoffs. So what should you look for in a strong business debt settlement partner?

Choosing the Right MCA Settlement Company

Navigating MCA debt settlement requires experience and the relationships to secure favorable outcomes. As you evaluate firms, look for the following core competencies:

1. Deep MCA Industry Knowledge

An ideal settlement company thoroughly understands the MCA space, including:

  • The leading funders and their typical contract terms
  • Strategies to best position settlement offers
  • Refinancing options to minimize settlement lengths

This expertise allows them to accurately forecast settlement timeframes and target balances based on your situation.

2. Established MCA Lender Relationships

The best firms have direct contacts at the major MCA companies and a strong track record of settlements. These relationships lead to better offers during negotiations.When speaking with potential partners, ask about their specific contacts and success securing MCA payoff discounts.

3. Legal and Compliance Expertise

MCA contracts carry pages of complex legal language. The right business debt settlement company can interpret the terminology to align settlement strategies to your situation.They should also ensure full legal and ethical compliance. This protects your business as offers get presented and negotiated.

4. Customized Cash Flow Planning

A strong settlement firm analyzes your accounts receivable, profit margins, and breakeven points. This allows them to create customized payment plans aligned with your capabilities.Having a cash flow-based recommendation prevents taking on debt that can’t be consistently serviced after settlements complete.

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5. Ongoing Support and Monitoring

Even after new payment terms get agreed to, most businesses need guidance optimizing cash flow. The right settlement company provides this ongoing advisory support.They also monitor for changes with the MCA lenders and ensure you meet repayment milestones. This keeps accounts in good standing as balances get paid down.

Overcoming MCA Debt

While MCA loans provide easily-accessible capital, they can quickly become an albatross dragging down a company’s progress. But businesses in this situation have options – including working with an experienced debt settlement firm.The right partner brings proven strategies for negotiating with MCA lenders and creating realistic payment plans. They also offer ongoing support optimizing cash flow for sustainable growth.With the proper plan, companies can permanently resolve destructive MCA debt and regain control of their financial future.

About Delancey Street

Delancey Street has over a decade of experience helping businesses find relief from MCA and business cash advance debts. Their dedicated team works hand-in-hand with clients to customize settlements and structure appropriate payment plans.They also provide ongoing advisory services to improve profit margins, streamline operations, and strengthen cash flows. Their comprehensive approach helps businesses permanently break free from debt and realize their full potential. Discover more at

Delancey Street is here for you

Our team is available always to help you. Regardless of whether you need advice, or just want to run a scenario by us. We take pride in the fact our team loves working with our clients - and truly cares about their financial and mental wellbeing.

"Super fast, and super courteous, Delancey Street is amazing"
$500,000 MCA Restructured Over 3 Years
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$250,000 SBA Loan Offer in Compromise
"Great choice for business owners who need a trustworthy partner"
$350,000 MCA Restructured Over 2 Years

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