If you own a business, you probably already know that maintaining sufficient
cashflow is critical. However, with seasonal fluctuations, competition,
and other variables outside of your control, trying to maintain financially
stability while operating a small business can be challenging. Money is
needed for inventory, raw materials, supplies, and human resources, so
taking a business loan or a merchant cash advance can seem like an attractive option.
But what will happen if you’re not making enough money to service the debt?
Most traditional business loans require a monthly payment that is commensurate
to the principal amount borrowed, plus fees, and compounding interest.
In contrast, a “Merchant Cash Advance” (MCA) will usually
require daily payment at an amount determined by the contract. Under this
arrangement, the business owner is given an advance of funds against their
merchant credit card processing. In exchange, the merchant agrees to pay
the advance along with a premium by authorizing the funding company to
withdraw daily payments from their business bank account.
Where you may be accustomed to making a monthly payment on bank loans,
Merchant Cash Advance funding usually requires a set amount of money paid each and every day.
If your business is struggling to bring in an adequate amount of money,
these daily payments could become nearly impossible to fulfill.
Get Business Debt Relief!
Call Today: (888) 301-0584
Don’t allow a defaulted business debt become the death of your company!
Speak to our
merchant cash advance lawyers to learn your debt relief options. Here are a few things you should know
about business funding; how to protect yourself, and what you should do
if you feel like you need to default.
What Happens When You Default on a Merchant Cash Advance?
When reviewing lawsuits for Merchant Cash Advances, our attorneys notice
that most of the contracts contain an
acceleration clause as well as a
personal guarantee. The acceleration clause will cause the full contractual balance to become
due when certain triggers arise, such as when the borrower defaults on
the daily payment schedule, or changing deposit accounts with the company’s
The cash advance is secured, or collateralized, against the businesses
future credit card receivables, and with a UCC lien, can be collected
through seizure of business assets. In the event of default, the funding
company could pursue the assets of a personal guarantor individually by
bringing a lawsuit.
Beware! Business Debt Tip #1 - Confession of Judgment: When a business owner is on the brink of default, the merchant advance
funding company might offer to temporarily adjust the payment plan due
to hardship, but they may request that the business owner sign a “Confession
of Judgment” (COJ). This is a powerful document. If the business
owner signs the Confession of Judgment, the funding company can seek entry
of judgment against the borrower without necessarily having to prove the
elements their underlying case. This can put the personal guarantor at
even greater risk.
Beware! Business Debt Tip #2 - Forum Selection in New York: A large number of Merchant Cash Advance funding companies are based in
New York City or Nassau County, NY. As a matter of their convenience,
they often prefer litigating their cases in a court local to them. They
can sometimes accomplish this by including in their merchant funding agreements a
Forum Selection Clause where the parties agree that any litigation will be initiated in a specific
forum. For example,
Merchant Cash and Capital a/k/a BizFi commences their lawsuits for cash advance cases primarily
in Nassau County Supreme Court. Since these companies provide funding
across many states, the Forum Selection Clause may put a borrower at some
disadvantage with respect to defending the claim. If seeking legal representation,
the borrower would need to retain a lawyer licensed in New York. The borrower
would likely benefit being represented by an attorney experienced with
defending lawsuits in the specific New York court where the lawsuit was
Debt Collectors for Business Loans and Merchant Cash Advance
Defaulted cash advances and loans can pile up quickly and can cause an
insurmountable burden on the company’s finances. With high rates,
even missing a few payments can cause business debts to spiral out of
control. There are penalties, collection costs, miscellaneous fees and
negative credit reporting that can cause a business owner to simply feel
that they have no option other than filing for bankruptcy.
Even when defaulting is unavoidable and based on legitimate financial hardship,
business lenders can hire debt collectors to call you at your home and
business, write you letters, or even retain a collections attorney to
bring a lawsuit. MCA funders and loan originators are in the business
to make a profit, and their collectors will work, sometimes aggressively,
to maximize their recoveries.
Reduce Business Debts
Our team of experienced lawyers has assisted with a wide variety of defaulted
debts; from corporate credit cards and business loans to vendor debts
and merchant cash advances. In addition to defending businesses and individuals
from debt collection lawsuits, we also assist in reducing business debts
through skillful settlement negotiations.
Some of the basic qualifications to retain our
reduce business debts is that the distressed company must be experiencing legitimate financial
hardship that can be substantiated, and further, the business must have
access to funds for repayment. In situations where a debt reduction is
not successfully negotiated, the lender might still be willing to restructure
the payments on the full balance so that it can be more affordably paid
by the borrower.
Our New York Lawyers Can Help Protect Business Debtors
First, we will analyze your situation, including how many debts are owed,
to whom, for how much, and whether they are current, in delinquency, or
default. We will discuss with you the status of the business, whether
it is still operating, and what assets exist. If you qualify for any of
our services, such as merchant cash advance restructuring or
business debt settlement, we will explain to you the advantages and disadvantages of your available
options, so you can make a well informed decision.
On behalf of distressed businesses, our New York City attorneys work to
restructure cash advances to obtain payment plans that can help keep your
head above water. Even if you have more than one MCA cash advance or business
loan, it still might be possible to get into a more affordable arrangement,
and potentially avoid a lawsuit or filing for bankruptcy.
Relief from Business Cash Advance & Loans
While getting funding from a Merchant Cash Advance may have helped you
find the financial wherewithal to get you off your feet, it can also easily
become the thing that stops your small business from reaching success.
If you are struggling to make your daily payments or have been forced
to take out loan after loan to make payments on the loans that came before
them, don’t struggle on your own to find the relief that you need.
Instead, contact the legal team at the Law Office of Simon Goldenberg,
PLLC to begin taking the necessary steps to take your financial freedom
back. We know what it takes to protect you from aggressive business collections.
Call (888) 301-0584 or
schedule a free evaluation to review your legal options.
Our business debt reduction and cash advance lawyers assist throughout
New York State.