Owners of small businesses who take out merchant cash advances (MCAs) may underestimate the risks involved. If not repaid on time, these loans can lead to severe financial consequences. What happens to the assets of business owners who default on their MCAs?
Potentially losing control of essential business assets
Business owners who default on their MCAs may face the seizure of various assets due to UCC lien enforcements. The lender can take control of essential business assets to recover the debt, such as:
- Equipment and machinery: This includes computers, vehicles and other equipment necessary for business operations. The MCA lender can sell these assets to recover the debt.
- Inventory and supplies: The lender can seize inventory and supplies to sell them and recover the debt.
- Bank accounts and accounts receivable: The lender can freeze bank accounts and seize accounts receivable to recover the debt. This can cause cash flow problems.
- Other business assets: The lender can also seize other business assets, such as furniture and fixtures, to recover the debt.
The seizure of business assets can have severe consequences for business owners. It can disrupt business operations, cause severe financial losses and ruin the reputation of a business. Thus, business owners can take steps to protect their assets from seizure. For instance, they can negotiate with MCA lenders to restructure their debt.
Navigating the process of MCA debt recovery
Business owners who are facing a looming seizure of their assets must take immediate action to explore options to prevent or mitigate the seizure. Seeking advice from an attorney may help them navigate the complex process of MCA debt recovery as they aim to protect their business interests.