If you are an owner of small business facing tough financial circumstances, you may have come across Merchant Cash Advances as a viable option for small business debt solution. Although MCA’s may seem like an attractive form of business funding at first glance, excessive business debt can hinder your company from growth. As such, it is important to know as much as possible about your MCA agreement prior to signing. Our business debt settlement lawyers provide a few tips:
Insist on knowing all of the fees upfront, and make sure you have a clear understanding of every one of them.
Make sure you having a thorough understanding of the terms and conditions. Some of these loans involve fixed a amount taken from your account everyday while other lenders take a percentage of your credit card sales daily. For example, a lender may demand 20 percent of your daily credit card receipts until you have paid back the full amount. Keep in mind that the 20 percent is not the interest rate you are paying.
Insist that the cash-advance lender provide at least a projected annual percentage rate (APR) for your business loan. This makes it much easier to compare the advance with other business funding options. In addition to an S.B.A. Express loan, there may be corporate credit cards or equipment leases that may be available to you at much more economical rates.
Shop around. The MCA business is competitive. Speak to different lenders and make sure you’re getting the best possible rate.
Beware of the Personal Guarantee and Acceleration Clause. Signing a Personal Guarantee simply authorizes the lender to sue you personally of you default on your payments and the acceleration clause makes the full amount due immediately.
Before entering into a MCA agreement as a small business debt solution, explore all other options available to you. If you have incurred a large amount of business debt and are looking for a way out, our small business debt solution lawyers can help you. From filing a Chapter 11 bankruptcy to business debt settlement, we will find a solution for you. Schedule your free initial consultation today!