It’s understandable for small business owners to consider merchant cash advances (MCA). The promise of quick cash and easy approval is appealing to anyone. But now that you’re experiencing difficulty in meeting daily or weekly repayments, you might be losing hope.
The fact that you’re also facing a uniform commercial code (UCC) lien might undoubtedly be distressing. Don’t worry — you still have rights as a business owner. Here’s a brief overview of what you should know about this business financing option.
Understanding your situation: MCAs and UCC Liens simplified
MCAs aren’t traditional loans. They’re advances on your future sales. Typically, you repay these through daily or weekly deductions from your business bank account. This can create a tough cash flow situation. A UCC lien, on the other hand, is a public notice that the MCA provider has a claim on your business assets. It’s like a “first dibs” on your stuff if you can’t repay.
While MCAs can provide quick cash, they often come with high costs. The repayment structure can be challenging, especially if your business experiences slow periods. A UCC lien can make it harder to get other financing or even sell your business.
Know your rights: What lenders can and can’t do
Even though MCAs aren’t regulated like traditional loans, you still have rights. MCA providers can’t harass you or use misleading practices. They must honor the terms of your agreement. If they’re taking more than agreed from your account, that’s not ok.
UCC liens should also not show up anymore on your credit report when you’ve paid off the advance. If they’re still there, you have the right to demand their removal. Also, while MCA providers can pursue collections, they can’t just seize your assets without going through proper legal channels. That needs to be done through a court order.
Your next steps: Options for protecting your business
Consider reaching out to the MCA provider to renegotiate terms. Many are willing to work with you to avoid default. If that doesn’t work out, consider seeking a legal professional early. The sooner you can consult with one, the sooner you can know your options and have legal guidance on your side. Remember, seeking help isn’t a sign of failure — it’s a smart business move.