Cash flow is critical to any business operation. Seasonal trends, competition and other factors beyond your control can have a serious impact on the finances of your small business. Creditors and debt collectors are constantly knocking at your door for payment. There may be a point when your business needs money and you are forced to take a merchant cash advance or a business loan. A bank loan requires a regular monthly payment and most merchant cash advances usually require a daily payment.
A merchant cash advance is not a loan.
This is a type of transaction where the lender buys a percentage of your future revenue. You receive a lump sum from the lender and your repayments are based on your daily sales. The more sales you do , the more you pay. The APR (Annual Percentage Rate) is very high and your business is paying more in the long term. You do not have access to all your daily sales funds because of the automatic regular deductions by the lender. It is difficult to change from one MCA lender to another. A merchant cash advance usually requires a fixed amount paid every day and this can be very difficult or impossible if your business is struggling. Initially, you need to approach the MCA and try to modify or defer payment until your business improves and you are on stable footing again. You need to create a comprehensive and detailed business debt schedule after carefully analyzing your business debt situation.
Reducing Merchant Cash Advances & Business Loans
The merchant cash advance company may offer a temporary adjustment of payments to your business but may request a confession of judgment from the owner. This is a very powerful document and may put the owner at risk. The lending company does not have to prove the underlying case and can seek judgement against the borrower.
A lot of merchant cash advance companies are based in New York or Nassau County and they prefer litigating cases in court closest to them. In most cases the borrower has to engage a specialized attorney that is licensed in New York.
By engaging an attorney that specializes in business debt, the borrower may be able to legitimize the financial hardship that the company is facing. A specialist can analyze the business situation and circumstances. An attorney may be able to skillfully negotiate payment terms with creditors so that the business can make payments that are more suitable and practical.
Our experienced business debt relief lawyers at ZocLaw.com have assisted many small businesses by negotiating with lenders on your behalf to reduce your merchant cash advance loans. Schedule your free initial consultation today.