Business loans and merchant cash advance (MCA) may seem like an attractive solution when financial resources are scarce. If you are a business owner, you are already aware that sustaining a regular cashflow is crucial. However, there are several factors out of your control such as increased competition, seasonal fluctuations, unfavorable economic conditions that may jeopardize the financial stability of your small business. Inventory, raw materials, human resources and supplies cost money.
What Happens If You Are Not Making Enough To Pay Back Your MCA or business loan?
Traditional business loans require that funds be paid back by monthly installments based on the principal amount borrowed, service and compounding interest. A MCA on the other hand, will require to make daily payments according to terms and conditions determined by the contract.
If your business is facing dire financial stress, making daily payments on a merchant cash advance can be almost impossible. Defaulting on your MCA does not mean that your business is doomed. Speak to one of our Merchant Cash Advance lawyers to discuss your business debt relief options.
What Happens When You Default On A Merchant Cash Advance Payment?
The actions that may follow when you default on your MCA lies largely on the terms and conditions set forth in the agreement between you and the lender. Many of these agreements contain a personal guarantee and an acceleration clause.
A Merchant Cash Advance Personal Guarantee
The collateral against a Merchant Cash Advance is the future account receivables of the business. If the lender issues a UCC lien against you, the funding company may seize the assets of the personal guarantor of the Merchant Cash Advance by bring a lawsuit.
Merchant Cash Advance Acceleration Clause
The acceleration clause will result in the full amount to become due at when the business defaults on a certain amount of payments, or changes deposit accounts with the company’s merchant processor.
Common Merchant Cash Advance Lenders:
Funding Circle USA Inc.
ML Factors Funding
Next Level Funding
Core Business Finance
FB Funding, LLC
ML Factors Funding