Entire companies close down due to large amounts of debt. Loans from banks, credit unions or other financial institutions can bury even the most profitable ones when interest soars too high, debt goes up and daily sales aren’t cutting it. It’s the same situation for businesses that take out a loan through merchant cash advances (MCA)—which aren’t even loans but advances on future earnings.
When you take out an MCA and find yourself overwhelmed by debt, it’s understandable to consider closing up shop. If you’ve made up your mind, then do so. But if you are not ready to let go of your blood, sweat and tears, read on to see other options.
Renegotiate the advance and its payment terms
Don’t rush to close the doors just yet. Your first step is to talk to your MCA provider. They’re in the business of getting their money back and they know a closed business can’t repay. So, they may be open to renegotiating the terms of your advance. Could they accept repayment extensions? Could they reduce the daily payment amount? It never hurts to ask.
Identify ways to reduce costs and repay debt
Look at your business with fresh eyes. Are there areas where you can cut costs to free up cash to repay the MCA? Think about assets you could sell. Unused equipment, surplus inventory or even property could be turned into cash. What about your customer payments? Are there overdue accounts you could collect? Every dollar counts and closing up shop isn’t the only option.
Prioritize getting your business back
You’ve put too much into your business to give up without a fight. With some hard work and careful planning, you can turn this situation around. Remember, your dream is still alive. No one else but you is passionate or capable enough to revive your business. But you can seek help from other sources.
When it gets too complex to navigate your debt situation, consider seeking a lawyer. A lawyer can help you determine a possible course of action and represent your interests in negotiations or legal proceedings.