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How to negotiate payment options with an MCA provider

On Behalf of | Mar 13, 2024 | Settlement Negotiations

When the cash flow of a small business takes a hit, the owner may choose to prioritize operating expenses over Merchant Cash Advance (MCA) payments. This will keep the business going despite the setbacks, whether due to low sales or pilferage.

Defaulting on an MCA payment schedule, however, puts the business owner in a high-risk position. This can cause the MCA provider to file a Uniform Commercial Code (UCC) lien to go after the business’ assets.

Inform your MCA provider of your problem

To avoid the messy situation of a UCC lien collection, keep your communication lines open with the MCA provider. In New York, alternative lenders can freeze assets several days after the missed deadline. After which, they can seize and liquidate your assets and put a halt to your business.

Even before the deadline comes, let the MCA provider know that you are unable to pay. Then try to find a middle ground by proposing these payment options:

  • Lower the interest rates for the time being.
  • Decrease the amount taken from credit card daily sales.
  • Adjust the monthly installment amount.
  • Extend the payment schedule.
  • Ask for chances to make interest-only payments.
  • Request for a lower tax debt amount.
  • Waive penalties and finance charges.
  • Suggest a sound settlement plan.

Filing for business bankruptcy may appear to be a solution. However, it will just clear the business from paying back the MCA. It will become your personal duty to pay as the owner, and your personal assets will be at risk.

The need for proper guidance in bargaining

It’s advisable to face the cash flow problem of your business while being honest and cooperative with MCA providers. An attorney can bargain with providers to save your business so that you may retain employees and continue serving customers.