This article shows how to handle your business loan if it is past due. Have you missed payments on a cash advance or business loan?
There are several fixes you can take when you are behind on payments. These steps and others can or make it much less severe. One step is to payoff the past due amount by refinancing.
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How to fix missed payments on a mca merchant cash advance or business loan and what to do when you are behind.
- Step 1 Contact the lender. Let them know you are having trouble paying the advance or loan. Be prepared to answer why you cannot pay it and how you will plan to catch up.
- Step 2 Ask the lender to work with you. Ask for lowered or suspended payments. If they refuse ask them to offer you a plan you can handle. Determine in advance what you are able to pay. Tell the lender what you can pay and ask them to set up a payment plan for that. Ask if they can adjust your daily payments as a percentage of sales
- Step 3 Follow through on your agreement.
- Step 4 *How to Tip: If you will not be able to continue paying the cash advance or business loan, ask the lender for options. There are often options available just by asking for help or letting the letting know you cannot continue to make the payments.
What if you cannot pay the cash advance or business loan and cannot catch it up?
If you cannot continue paying the cash advance or business loan, ask the lender what the options are. For missed mca payments, there are good options for past due borrowers.
If it is not a mortgage loan, the best solution is usually to try to work with the lenders. When that is not possible, other options include:
1. Pay a settlement on the mca merchant cash advance or business loan.
If you consider this option, negotiate hard with the lender on how this will be reported on your credit. You want to push for the best possible credit bureau reporting of this event. If the lender reports the tradeline as “settled for less than full balance”, this may be the best reporting.
2. Applying with another lender
This is another excellent option if you can qualify. Payoff the debts with a new loan. This works well if the balance you are past due on is low. If your current past due amounts has not damaged your credit too much yet, this option may work.
3. Another option is to ask your current lender to modify the loan.
Your current loan is $500 per month and was for 48 months. You have 10 months left. Ask the lender to modify the mca cash advance for a lower payment and more months. As a result, ask them to lower it to $200 to $300 per month for 20 and 25 months.
Tell them this benefits both of you because you will have a payment you can make and as a result, their loan will be paid. Some lenders do not want to modify. However, if you can show them you will be able to pay the past due amount by getting a lower payment, they are more likely agree to it.
Provide documentation to support your request
Prepare a quarterly or monthly profit & loss statement to show the lender that you cannot pay but you will if they lower it.
4. Take another hard look at all of your current expenses.
Can you easily reduce expenses somewhere else? Are there services that you are paying for that you really do not need and can cut? This can include business expenses and personal expenses.
How to fix your business past due loan. 1. Contact the lender. 2. Ask the lender to work with you by lowering or suspending payments. 3. Follow through on your agreement.
FAQ’s – Frequently asked questions and comments
Question: How can I fix missed payments on my cash advance?
Communicate with the advance company. One or two missed payments should not be a problem when you are in contact with them. Consider asking for a repayment plan or restructuring if you cannot pay at all.
Question: Will my credit be hurt if I miss payments on my mca cash advance?
A few missed payments should not hurt your business or personal credit. Your credit with that lender may be affected when several payments are missed. You may have trouble getting business funding again from that lender in the future.
Question: Will missed mca payments keep me from getting other business loans?
Defaults, lowered payments and other modifications may affect your ability in getting other business loans. Negotiate hard and you may be able to avoid being declared a default even if you have defaulted contractually.
Accounts receivables financing
Accounts receivables financing is another way to increase the cash flow you need to pay your current past due merchant cash advance or business loan. This can give you cash now which may be enough to pay the payments you missed and are behind on.
Consider an asset based loan
This includes a loan against equipment. Funding is between 24 and 42 months and includes a monthly payment. Earth moving equipment, Yellow Iron and “over the road” OTR rigs, semi-trucks are usually accepted.