How to Get Out of a Merchant Cash Advance Loan
The Cons Of Merchant Cash Advance Loans
Before getting started, let’s have a look at why Merchant Cash Advance Loans should be avoided, if at all possible. Merchant cash advance loans, also known as MCAs, are a type of financing in which a lender advances a lump sum of cash to a business in exchange for a percentage of the business’s future credit and debit card sales. While merchant cash advance loans can be an attractive option for some businesses, there are several cons to consider before pursuing this type of financing:
- High-interest rates: Merchant cash advance loans often come with high-interest rates, which can make them an expensive form of financing. Since the lender is taking on a higher risk by advancing funds without collateral or a personal guarantee, they will charge higher interest rates to compensate for the risk.
- Hidden fees: In addition to high-interest rates, merchant cash advance loans may also come with hidden fees, such as origination fees, processing fees, and prepayment penalties. These fees can add up quickly and increase the overall cost of the loan.
- Unclear terms and conditions: The terms and conditions of merchant cash advance loans can be complex and difficult to understand, which can lead to confusion and misunderstandings between the borrower and lender. It is important to carefully review the terms and conditions of any loan agreement before signing on the dotted line.
- Impact on cash flow: Since merchant cash advance loans are repaid through a percentage of future credit and debit card sales, they can have a significant impact on a business’s cash flow. Depending on the terms of the loan agreement, businesses may be required to repay a large percentage of their daily sales, which can make it difficult to cover other expenses.
- Potential for default: If a business’s credit and debit card sales do not meet the expectations outlined in the loan agreement, they may default on the loan. This can result in additional fees and penalties, and can also damage the business’s credit score.
Overall, merchant cash advance loans can be a risky form of financing that come with high-interest rates, hidden fees, and unclear terms and conditions. Before pursuing this type of financing, it is important to carefully weigh the pros and cons and consider alternative options.
Can You No Longer Afford The Loan? Here’s What You Should Do:
When your merchant cash advance payments become unaffordable and you feel that you may not be able to continue with your scheduled payments, what should you do?
Getting out of a merchant cash advance can be a challenging process, but there are several steps you can take to try to resolve the issue:
Review the Terms and Conditions
The first step is to review the terms and conditions of your merchant cash advance agreement. Understand the repayment schedule, fees, and penalties that may be incurred if you default.
Contact the Lender
Contact the lender who provided the merchant cash advance and explain your situation. Request a payment plan or some other arrangement that would allow you to pay off the advance without incurring excessive fees.
Refinance or Consolidate
If you have multiple cash advances, consider refinancing or consolidating them into a single loan with lower interest rates and more manageable payments.
Negotiate a Settlement
If you are unable to make payments or arrange a payment plan with the lender, you may consider negotiating a settlement. The lender may be willing to settle for a lower amount than what is owed.
Seek Assistance From A Debt Settlement Firm
If the lender is uncooperative or unwilling to negotiate, you may consider seeking assistance from a debt settlement firm. A debt settlement firm can help you understand your rights and options, and may be able to negotiate with the lender on your behalf.
Negotiate Debt Settlement With The Help Of CuraDebt
All debt, including MCA debt can be settled at a discount. Regular credit card debt, mortgage debt, equity line debt, line of credit debt, equipment finance debt, and MCA debt etc., all can be settled at discounts, if handled properly.
With the help of CuraDebt, you will be set up with a special purpose savings account. On a monthly basis, you will make affordable deposits into this account. Once a good amount of savings has been accumulated, we will contact your creditors on your behalf and begin negotiations. With us, you will never have to worry about dealing with the creditors on your own again.
Conclusion
If your business cannot continue to service your MCA debt payments, the first step is to call the lender and try to work out a new more affordable repayment schedule. If that fails, begin to gather and review all of your financial data and contact us to assist. If it is determined that you can no longer service the debt, we will get you set up with a client account. We will negotiate in good faith with your MCA lender to secure sensible and affordable MCA debt settlement resolutions for you and your business. Our team of business debt professionals are here to help you. Contact us today for your free consultation. 1-877-504-0981