Small business owners across the country are no strangers to financial stress, particularly when it comes to merchant cash advances (MCAs). These MCA loans can provide quick access to capital but come with steep repayment terms.
The lender may demand daily payments, which can be overwhelming for small businesses. If you are a borrower dealing with daily payments who has defaulted on an MCA payment, can you do something to stop daily payments?
Understanding MCA agreements
MCA agreements typically involve daily or weekly payments via Automated Clearing House (ACH), which can burden small businesses. The payment terms may include a fixed amount or a percentage of the business’s daily or weekly revenue.
Impacts of daily payments
Daily payments can have a significant impact on a business’s cash flow and operations. The constant outflow of funds can leave businesses with limited capital to invest in growth or cover unexpected expenses. Daily payments can also lead to cash flow volatility, making it difficult for businesses to manage their finances. This can affect the business’s ability to thrive and meet MCA obligations.
Consequences of default
Meanwhile, defaulting on an MCA payment can have serious consequences. The lender may enforce a UCC lien, which can give them control over your business’s assets. This can lead to the seizure of assets or even business closure.
Ways to stop daily payments
Stopping daily payments after defaulting on an MCA payment is not straightforward, but it is possible. You may be able to negotiate with the lender to switch to weekly payments or temporarily suspend payments. In addition, you might be able to settle the debt for a lump sum or restructure the payment terms.
Forging a way forward
Navigating daily payments after defaulting on an MCA payment can be challenging and complicated. With legal advice, you may know your rights and options when dealing with the lender. Additionally, having legal counsel may help you find a more manageable payment plan and forge a way forward.