Businesses regularly borrow hundreds of thousands of dollars to start up and cover their operating expenses. While just about every company takes out a loan intending to pay it back, things don’t always work out that way.
This year has been a particularly challenging one for companies managing debt as the government has severely restricted their ability to sell their goods and services.
If you’ve taken out a merchant cash advance from a lender and are now finding yourself unable to pay, you may be wondering how best to proceed. The good news is that there are steps you can take to help alleviate the debt/pressure you’re under.
In this post, our team breaks down what your options are when dealing with lenders that are growing impatient with your debt. Keep reading to find your path forward!
1. Find a Way to Pay Back Your Lender
It may seem like an obvious relieve MCA struggles solution but if you owe money on a merchant cash advance, the easiest way to get out from under it is to pay it. You may not have the cash on hand to accomplish that but, if you’re a business owner, you may have other options.
For example, if you own a trucking company, liquidating one of your vehicles could give you the cash you need to get out from under debt.
Ask yourself, “If I absolutely had to pay down my merchant cash advance, could I?” If you come up with options, consider them.
2. Talk to Your Lender
Believe it or not, communicating with your lender can have a tremendous impact on your ability to navigate debt issues.
Hop on the phone with who you owe and describe your situation. Let them know that you’d love to pay them back but that you’re not in a position to do so at the moment.
Lenders should offer you an extension that can give you the breathing room you need to come up with money. Others may spread out your payments over more time which will lower your monthly expenses and make your payments more manageable.
Remember, lenders just want to get paid. Most will be willing to get paid slowly if they feel that gives them an eventual chance of recouping what they lent.
3. Get Your Loan Refinanced
Getting a delinquent merchant cash advance refinanced can be tricky. That’s because lenders will be able to see how much debt you have on your books before agreeing to lend to you. If they see that you’re borrowing money from them to pay off somebody else, they may not want to work with you.
Some lenders, however, target people that are looking to refinance delinquent debt and will be more than happy to help you do away with your current loan. We recommend running internet searches for “refinance debt” to find these lenders. If you have low credit, you might also add the keyword “low credit” to the mix so you can find the specialty lender you need.
Just be wary of refinancing with people that target those who are under financial duress. Many of these lenders offer predatory deals that might even be illegal in your state.
4. Talk to an Attorney
There are several legal routes you can take to become debt-free. The best way to assess what each of those routes looks like and what their long-term implications are is to talk with an attorney.
Debt/bankruptcy attorneys are plentiful in every state. Some even work pro-bono through financial advocacy groups.
Run internet searches, talk to your local chamber of commerce and find an attorney that’s willing to speak with you. Even a free consultation could give you the guidance you need to start moving forward with managing your debt.
5. Declare Bankruptcy
With an attorney’s blessing, declaring bankruptcy can be a great way to get out from under your merchant cash advance debt issues. Bankruptcy isn’t all fun and games though.
By declaring bankruptcy, depending on your situation, you may still need to pay lenders a portion of what you owe them. Furthermore, your credit will be hurt and your ability to get loans in the future will be hobbled.
Understand all of the pros and cons that accompany the type of bankruptcy you’re considering and only enter into it if you and your legal representation think that it will bring you a net positive.
6. Always Respond to Queries
If you walk away with a single piece of advice from what you’re reading here, let it be this… Always make good faith efforts to cooperate and communicate with the merchant cash advance brokers or direct lenders that are reaching out.
Remember, you borrowed money from them and they’re just trying to get you to follow through on the agreement you entered into. Be empathetic to that fact and honest as to why you’re struggling to honor your deal.
By communicating and making an effort, you can reach resolutions that behoove both you and your lender. By ignoring communication, things will become contentious and if you end up in court, rulings can be far less favorable to you.
A Delinquent Merchant Cash Advance Doesn’t Have to Derail Your Life
It can be scary managing a delinquent merchant cash advance. Fortunately, you have options when it comes to getting out of trouble and moving on with your life.
Our team wishes you the best as you explore the pathways we’ve presented and welcomes you to read more merchant cash advance loans content on our blog should you need additional insight.