An Intelligent, Assertive Lawyer In Brooklyn Serving Businesses Throughout The Nation
  1. Home
  2.  | 
  3. Merchant Cash Advances
  4.  | Can you restructure an MCA debt?

Can you restructure an MCA debt?

On Behalf of | Mar 6, 2024 | Merchant Cash Advances

A merchant cash advance (MCA) is an option some business owners consider to access quick and easy funds. Unfortunately, it is not uncommon for people to wind up worse off because of high interest and an MCA measurement called a factor rate.  

A factor rate measures the payback cost of an MCA. If a business takes out an MCA with a 1.5 factor rate, they must pay $1.5 for every dollar they borrow, plus interest charges and other fees.  

What are the benefits of a restructured payment term? 

If cash flow is slow and interests keep piling up due to repayment failure, business owners can opt for an MCA debt restructuring. Restructuring allows parties to avoid loan defaults through renegotiation of the terms of an MCA debt. This process can involve:  

  • Reducing daily or weekly repayment amount 
  • Extending the repayment period  
  • Potentially reducing the outstanding principal 

With a viable repayment plan, business owners can manage debts and have a higher chance of avoiding bankruptcy. Still, the terms and conditions of the repayment plan should be in writing.  

Should you consider restructuring your MCA debt? 

If you are keen on paying off all your MCA debts and want to enter a restructuring agreement, keep these things in mind: 

  • Plan a practical and doable repayment plan  
  • Read the fine print  
  • Choose the right debt settlement firm 
  • Consider the potential credit consequences 

An MCA loan can significantly impact a business in the long run. It can either help with managing the business’ finances or make things worse.

Before making any decisions, you may seek help from legal professionals or financial advisors who can help you navigate the complex roadmap of debt restructuring.