Merchant Cash Advance Default
There are a variety of traditional vehicles for business financing, including; credit cards, lines of credit, and commercial loans. However, over the past few years, it has become increasingly popular for businesses to cover their capital needs by taking an advance against their anticipated credit card receivables, known as a Merchant Cash Advance, or MCA.
In an MCA, the lender will buy-out a portion of the business' merchant receivables for a set period of time, in order to recoup the amount advanced, plus a sizable fee. The funding company will oftentimes require daily or weekly payments, and may require the business owner to personally guaranty repayment in the event of default. Worst of all, many funding companies are requiring borrowers to sign a Confession of Judgment, which expedites the legal process in the event of non-payment of the cash advance debt.
If you're left with no choice other then defaulting on a merchant cash advance loan, it's important to understand the consequences of default, and the potential resolution options, which may include:
- Settling the MCA for a reduced amount;
- Restructuring the daily or weekly payments under a more affordable schedule.
Have You Defaulted On A Merchant Cash Advance?
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Example MCA Negotiation
In this example, a financially distressed business retained our firm to assist with resolving a defaulted Merchant Cash Advance owed to Merchant Cash & Capital a/k/a Bizfi Funding. Although the business repaid a portion of the cash advance, there was a remaining balance of about $242,000.
MCC/Bizfi initiated a lawsuit in New York within just a few months of when the business defaulted, abd they filed a UCC-1 statement, perfecting their security interest. Only a lawyer licensed in New York could defend this company from the merchant cash lawsuit.Their agents made repeated demands for repayment in full. This was simply impossible for the borrower. If they were forced to repay in full immediately, it could have resulted in the business closing down, or even filing for bankruptcy from protection from creditors.
After defending the business and negotiating arduously, the parties agreed to settle the matter for $150,000. This is a savings of approximately $92,000 from the balance. Upon receiving the settlement payment, Merchant Cash & Capital a/k/a Bizfi Funding discontinued the lawsuit and filed a UCC-3 statement, extinguishing their collateralized security interest.
Through the efforts of our New York merchant cash advance attorney the settlement that was achieved helped the business owner:
- Substantially reduce the MCA debt;
- End the merchant cash advance lawsuit and avoid potential judgment;
- Alleviated concerns about seizure of business assets; and
- Avoid filing for personal and/or business bankruptcy.
Most importantly, by being relieved of the debt associated with the cash advance, the borrower was able to continue operating his business, service his other loans, and focus on generating profits.
Need Help Reducing a Defaulted Merchant Cash Advance?
Our team of negotiators have years of combined experience and have honed their skills in reducing and restructuring debts to maximize the results we achieve for our client's. Whether you need help restructuring a pre-litigation business debt, or need a lawyer to defend you in New York lawsuit, we strive to help every merchant achieve an affordable and reasonable resolution to their business loans and cash advances. If you're a small business that has a merchant cash advance default with Merchant Cash & Capital, BizFi, or any other business lender, call us to learn what our business debt relief team can do for you.
Contact our debt relief team at (888) 301-0584 to schedule your free evaluation.
Results vary; prior results do not guarantee similar performance. While we strive to maintain accuracy and provide relevant case histories, in order to protect the confidentiality of our client(s), all numbers are approximations and are offered for illustrative and general informational purposes only. This page does not purport to contain any legal advice. We make no claim or allegation of wrongdoing by the entities discussed on this page. There is a distinction between negotiations conducted under a consulting basis (non-legal services), as opposed to legal services, such as lawsuit defense, which we handle only in New York & New Jersey. Call us for an evaluation of your situation.