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Senator questions DoorDash’s MCA business practices

On Behalf of | Jul 1, 2024 | Merchant Cash Advances

Restaurant owners in New York City, it’s time to wake up to a serious threat looming over your businesses. For years now, DoorDash has been a mixed blessing for restaurants. While their third-party delivery business helped keep many restaurants afloat during the pandemic, DoorDash also takes a big cut of every sale. But that’s not the only way DoorDash is taking money out of your pocket. Did you know that DoorDash also issues merchant cash advances to restaurant owners?

Senator Sherrod Brown of Ohio has sounded the alarm on DoorDash’s Merchant Cash Advance (MCA) practices in an open letter to the company, and the details are alarming. The food delivery giant has been pushing these MCAs, but at what cost to you?

Sky-high costs and cycles of debt

MCAs offered by DoorDash come with staggering costs. According to Senator Brown, merchants have faced interest rates equivalent to over 800 percent. This isn’t just a minor inconvenience; it’s a financial stranglehold. The senator compared these outrageous payments to payday lending practices, which isn’t far-fetched. Just like those predatory loans, these MCAs can trap you in a relentless cycle of debt, renewing and stacking advances until you’re buried under the weight.

DoorDash’s role in the problem

DoorDash isn’t just a passive player here. Since 2022, the company has actively promoted MCAs through its DoorDash Capital Program. This isn’t about helping small businesses; it’s about exploiting them. As the senator highlighted, platforms like DoorDash should be protecting restaurants, not leading them into financial quicksand.

Protect your business

If you’re already struggling with an MCA from DoorDash or any other platform, don’t hesitate. Contact an attorney who represents small business owners and can help you fight back against these predatory practices. Your business’s future depends on it.