Lowering MCA Payments: Pros and Cons

Lowering MCA Payments.    Is it a good idea, or not?  Why would you not lower your cash advance payments if it will help your cash flow?

There are significant advantages, and disadvantages to lowering your daily cash advance payments.    Disadvantages can include large extra fees, difficulty getting future business loans and being declared in default.

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The lender has agreed to lowering  mca payments for you.  …….But should you do it?

Pros to Lowing MCA Payments: 

1. Immediate Cash Flow Relief: 

Lowered payments will give your business the immediate relief it needs from  daily advance payments.   How much it helps will depend on how many advances you have, how much the payments are lowered, and for how long.  Switching to fluctuating payments based on sales is another solution.

2. Saving Your Business

If you have stacked daily advance payments, first find out from all the advance companies if they will lower the payments, for how much and how long.  It may turn out that the savings are not enough.

Calculating this ahead of time will help you figure out if you should go forward or not.   Some advance companies may lower the payments and others will refuse.  The amount they will lower and for how long is different from one company to another, but the savings can be significant.


Acme inc has 2 daily cash advance payments.   Each payment is $200 per day.   $200 per business day times 21 business days per month = $4,200.      Two advances means $4,200 times 2 = $8,400.

Each cash advance company agrees to lower the payments in half,  to $100 per day for 21 days.   $100 per business day times 21 = $2,100 per month.   2 advances = $2,100 times 2 = $4,200.

The total savings is $8,400 – $4,200 =  $4,200 per month.  This is significant and your business may need to go this route if it makes the difference between staying in business or going out of business.

3. Avoiding Default

Lowering payments may prevent an outright default.  It will depend on what your contract says and discussions with each lender.    Many official defaults can be avoided by negotiating with the lenders and having a clear agreement that they will not designate and list your account as a default.   Check with the other owners when your business ownership percentage is less than 100%.

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Cons of lowering daily payments:

1. A Derogatory Listing with Business Lenders

Lowering cash advance payments will be considered a negative to funding companies.  Your account will be flagged.   Other lenders will see that your payments were lowered and may decline future requests.

2. It can still be a Default. 

Lowering cash advance payments almost always is a default per the original contract you signed.

It is very important to negotiate a non default  into your agreement when you lower payments.  Your account may be tagged and put into a database that still lists your business as a default account.   You may not even know this happened in spite coming to an agreement with the lender. 

3. Additional fees and other charges.

Lowering payments still means that your business did not meet the terms of the original agreement.    The advance company did not get payments they originally required.

They may impose a large additional fee as part of the agreement to lower payments.    This fee is often added to the end of the contract.    Your payments are temporarily lowered but the number of payments is extended.

This may still be better than missing payments and having an outright default, but factor this possibility into your decision.   The fees can often be significant, so ask about them when negotiating.

4. Trouble getting money later.  

Lowering cash advance payments will be considered a negative to other funding companies.  Your account will be flagged.   Other lenders will see that your payments were lowered and may decline any request.

This is basically a delinquency on your record and will make future borrowing harder.   Your business  will be declined more often.    This derogatory on your record may last for years.  As a result, your business may have additional problems getting financing.

FAQ on Lowering cash advance payments.

How can I lower my cash advance payments?

Call the merchant cash advance company and ask for your payments to be lowered.   You must provide a verifiable and critical business reason.   So make the request before you start missing payments.

Does it hurt me to lower payments?

Your account may be listed as having lowered payments in databases that can be seen by other lenders.  It can hurt future requests for business funding depending on the lender and type of financing. 

Does lowering payments mean I defaulted?

It depends on the lender, as well as the original contract  and your negotiations with them.  Read the contract first before contacting the lender.   Make sure they do not declare a default, otherwise your account may still be declared that way without you even being aware of it.


Lowering mca payments should only be done as one of the later stage options you choose to improve your cash flow. There are negative consequences that can be significant.

Once you choose this option, it needs to be handled  in a systematic way.  Decide which advances you need payments lowered on and make a plan to show the lender.  Explain why you need payments lowered, how much and for how long.

Prove to the lender that you will be able to resume regular payments and then keep making those regular payments.

If you have multiple advances, it is critical to take them all into consideration. Address them all at one time, rather than a scattered approach and your cash flow should be sustainable for the long term!