Are you looking forward to getting a merchant cash advance to expand your business and don’t know about the consequences you may face if you, unfortunately, miss a payment? Well, then you have come to the perfect place. This article is for you if you want to increase your knowledge of how to settle merchant cash advance.
MCA has many advantages and disadvantages, and you have to be careful. This article will elaborate on all the consequences you might face if you miss a merchant cash advance payment. You don’t have to worry about them as we will also guide you about various solutions if you fall prey to those heavy penalties and interest increases.
What is MCA
MCA stands for Merchant Cash Advance. It is a type of loan that you can get for your business. The credit card sales and the future revenue made by the business owner decide the interest. MCA is one of the top priorities because it offers quick and considerable payments to pay back once you make sales.
This kind of payment is generally available to those types of businesses with a greater volume of credit card sales. It has been used as non-traditional financing by many entrepreneurs.
Advantages and Disadvantages:
There are many advantages of the merchant cash advance. Businessmen like restaurant owners, retail store owners, and other small business owners quickly get a massive sum of money, helping them expand their business. Getting the money from an MCA funder is a reasonably quick process as you receive the money within a few business days of application.
Choosing a merchant cash advance is very flexible. You can choose between different payment plans. As their interests depend on sales, you have to pay less when your sales are low. This advantage is beneficial for small business owners who face seasonal fluctuation in their sales.
Along with the benefits, there come some disadvantages as well. You have to be vigilant about the hidden charges which might affect your business. Business people usually have to pay back and settle merchant cash advance within a brief time. The funder of MCA typically takes a percentage of sales which is usually daily. It is calculated based on sales through debit or credit cards.
Merchant Cash Advance has higher costs as compared to other loans. Another disadvantage is that merchant cash advance funder will utilize a share of your future sales in pacing back the advance that you got.
Consequences of Not Repaying MCA
The consequences of not repaying an MCA can be severe. If a business person falls behind on payments, he struggles to get through all the penalties and the late fees.
Decreased Credit Scores
The credit score of the businessman is affected if the MCA funder notifies the credit bureaus. A decreased credit score can affect future loans. If a person in business manages to get loans in the future, he has to pay extra interest.
Added Fees And Increased Interest Rates
The lender of the merchant cash advances that are not secured might add extra fees to the payment. They might also increase their interests concerning the time. Whenever a business owner misses his merchant cash advance payment, the MCA funder adds a charge as a penalty.
Trouble For The Business
When you delay the payment, the merchant cash advance funder might adjust the percentage of interest taken from your account daily. Due to these unexpected withdrawals, the business owner might encounter a shortage of funds for his business.
Solutions For The Downsides of Merchant Cash Advance
Due to any circumstances, if you fall prey to these unfortunate consequences, there are a few ways that you can use to settle merchant cash advance and deal with your MCA funder.
Re-negotiating With Your Merchant Cash Advance Funder
As a business owner, you can try to have a conversation with the lender about the loss you face. You can re-negotiate with your merchant cash advance funder about your payment term. Using this approach, you might find a solution to your problem by getting the interest decreased or getting the payment period increased.
Guidance From Debt Relief Lawyer
You don’t know the legal details for a merchant cash advance; you can hire a lawyer to sue MCA funder. He or she can re-negotiate the terms of the contract with your lender on your behalf. As a debt relief lawyer has all the information about debt cases, he can surely help you with the circumstances.
Refinancing The Debt With A Loan
If you can not find any other solution to repay, you can apply for another long-term loan and has smaller periodic payments. You can use the pay from that loan to repay your merchant cash advance loan. It will reduce the risks of increasing further interest and help with the shortage of funds your business might face.
Seeking Help From A Legal Agency For Negotiation
If you believe that your business is facing a massive loss due to the merchant cash advance, you can try to settle merchant cash advance by negotiating with your merchant cash advance. If that does not seem to work for you, you can seek legal counsel and hire a debt relief lawyer to sue MCA funder.
You can sue MCA funder only if you believe that he has breached the interests’ legal agreement. In that unfortunate situation, you should get help from legal counsel and take legal help as soon as possible.
You might feel like merchant cash advance funds are an excellent way to expand your business, but you shall also consider the cons of merchant cash advance funds. You should be completely aware of the consequences that might take place if something unfortunate happens.
You should have the knowledge to settle merchant cash advance so that your business might not get in trouble. If you have fallen victim to overwhelming penalties, we highly recommend seeking guidance from experienced debt relief lawyers who are experts to minimize your loss.
We hope this article would have increased your knowledge about MCA funds’ consequences and their possible solutions.