Some businesses that have defaulted on 1 + mca cash advances in the past now understand the amounts and daily payments they can handle, and make. These programs are targeted for:
Missed cash advance payments
Delinquent or lapsed payments.
How to get another Cash Advance after not paying a previous one.
Step 1: Research companies online that offer merchant cash advances to businesses that have a previous default on an mca cash advance. Closely review restrictions for terms and conditions of approval.
Step 2: TIP – Repayment of a previously defaulted merchant cash advance as well as the amount of time since the default may affect your ability to be approved under different programs. Ask if there is a minimum time requirement since the cash advance default. Know the month and year your business first officially defaulted and the amount of the default. Default reporting drags on time wise in business and personal credit reports and makes it look like the default was much more recent than the original date the merchant cash advance company declared a default. Any payments you made on the default often do not appear on the business and personal credit reports a lender looks at and you will not get credit for any payments made. Provide documentation of the payments made.
Step 3: Select the programs that your business will most likely qualify for.
Step 4: Make contact with these lenders that fund with previous defaults. Try to verify how likely your business is to meeting the funding program conditions and requirements.
Step 5: Submit an application for funding. Provide all documentation you have that improves your chance for an approval. Provide documentation that proves the time since the default and if any payments were made.
Step 6: If approved, review terms and conditions. Rates and terms will not be as favorable for some time on your advances after defaulting.
FAQ Frequently asked Questions on getting an mca merchant cash advance after defaulting
Can I get a merchant cash advance after I defaulted on one?
About 6 months to 1 year after a default your business can be considered for financing, including a cash advance. Approvals and amounts depend on how well your business has recovered, it’s ability to repay and if any of the default was paid.
What if I did not repay any of the defaulted cash advance?
It is easier to get another cash advance if you repaid or settled the old defaulted cash advance. New lenders want to see your business made an effort to repay what it could or reach a settlement on the debt.
Does it matter if I defaulted on more than 1 advance?
You may still be able to qualify even if you defaulted on more than 1 previous advance. Approval depends a lot on whether you repaid any of the debt, how many you had, how long it has been.
The best merchant cash advance renewal terms: Benefits and steps
Largest Early Payoff Discounts
How to Direction:
Step 1 Talk with a representative at your current mca company. Give them your most recent three months business checking account statements and ask them to review your file in advance of their underwriting reviewing your request.
Step 2 Ask the representative to estimate the renewal amount, the number of months and rates. Ask for a better rate on a renewal.
How to Tip: If a renewal offer is made, ask for at least a 2% lower rate on each renewal. Some cash advance companies will not pre-review your file. If they won’t, let underwriting process your file.
Step 3 Tell your current cash advance company that you are shopping for a better offer and are comparing their offer to others.
Step 4 Apply with one or two competitors. If they beat your current mca cash advance companies rate and terms, take their approval offer and ask your current cash advance company to beat that offer. Review the funding stipulations to make sure you can provide everything needed to close.
Step 5 Decide which renewal is the better loan offer, complete the transaction and receive funding.
FAQ: How to get the best merchant cash advance renewal
How can I qualify for more money on a renewal?
All programs have the most aggressive approval offers on renewals with fast funding. Submit your application and provide
the most recent statements for same day offers.
What are your longest terms?
The longest terms are up to 18 months. Your business will get the longest offer available.
Monthly payment programs are up to 60 months now for qualifying customers.
Can you approve me after I was declined by my current mca for a renewal?
Yes, these programs specialize in approval offers for customers declined for renewals with their current mca lender.
More customers get an approval with the highest offers compared to other advance programs.
Do you match or beat other offers?
We match or beat other offers. Provide the approval information from a competitor to get started on a better approval today.
Before applying for a the advance renewal
Make a list of this specific information. Discuss it in advance of applying with all cash advance companies you want to talk to. You may be able to either pre-approve yourself or pre-decline yourself before applying. It is better to know you will likely be declined before applying, rather than applying and being declined.
If the cash advance company is not willing to seriously pre-review your file, you can choose to apply anyway. Your goal is to get as many cash advance companies to pre-assess your file as possible. Do not demand they do in order to apply. If you demand that the cash advance company pre-reviews your file, you may be eliminating yourself from the best option available.
Is your cash advance renewal not enough? Then a 3rd position cash advance for instance, is another option.
Is closing your business checking account to stop an mca cash advance a good idea?
Shutting down your current account and opening a new business checking account is a bad idea and the worst way to get out of a merchant cash advance. Consider much better alternatives to stop an mca such as Payoff and Consolidation options. Apply below.
Get started on safer, better solutions. Apply Now, below:
Call Tel: 1-919-771-4177.
FAQ frequently asked questions on closing a business checking account to stop mca cash advance payments
Can I close my business checking account to stop a cash advance daily debit?
Closing your account is not allowed and may be considered an intentional default. Call the cash advance lender and try to work out a solution. Payoff or consolidation options are available if you are not offered a repayment plan you can pay.
What will they do if I close my account without telling them?
It can be called an intentional default and you can be sued. They are much more likely to take legal action against you and your business through a lawsuit filed in state or county court. There could be accusations of fraud if accusations of an intentional fraud are made.
What are better options?
Working with the cash advance lender to negotiate a lower payment is almost always better than closing the account. That should only be seen as a possible last option under extreme circumstances. In many cases, the bank has called the loan due and you must come to a negotiated solution with the lender to avoid a default.
The following is what many debt settlement programs tell customers to do.
Sign a contract which allow them to represent your firm in communications with lenders and mca merchant cash advance companies after missed mca payments.
Pay their company to start the process.
Close your business checking account per their instructions or advice.
Allow them to represent you in negotiations.
There are several problems and possible severe consequences to closing your business checking account to stop paying cash advances or loans and signing a debt settlement contract .
The lender can also consider this an intentional default or fraud.
The lender or mca company can file a certificate of judgement and may also be able to debit funds in other accounts you may have at the same bank or other banks
You may not be able to talk to the lenders or cash advance companies directly any more even if you want to. Language in the contract may not allow you to talk contact the funder directly
You may not have influence or say in the final agreement.
The contract you sign take power and decisions out of your hands and puts much of it in the hands of a 3rd party.
Other options to closing your business checking account
Contact the lenders directly and try to discuss your financial situation and reach an agreement with the lenders yourself.
Payoff the merchant cash advances with other loans if the balances are low enough
Discuss your financial situation with a business attorney
The advantage of some of these options in general is that they either show you are sincerely trying to work with your lenders to settle your debt, are forming a coherent strategy to do so, or have officially determined that you cannot pay. These also have advantages over closing your account.
Your business can get an mca merchant cash advance renewal with lower rates and longer terms by understanding tips on cash advance qualifications and guidelines.
The same programs also offer mca merchant cash advance renewals with rates as low as 12% to 15% and up rate factors and longer terms if your business qualifies.
Frequently asked questions FAQ How to get an mca merchant cash advance with lower rates.
How low of a rate can I get?
The lowest rates start at 8% for the best credit, strongest cash flow and longest time in business. Rates in the low teens and higher are more common for most businesses.
Can we switch to a lower rate immediately?
You can by paying it off with a lower rate advance or regular loan. Using the funds from your new funding to payoff the balance on your old advance works especially well when the balance is low.
Can we get a better rate with a regular business loan?
Regular business loans usually do have a lower rate. They may also require a personal credit bureau score of 600 or higher. Time in business of 1 year or longer is needed for lower rate business loans.
There are cash advances you can use like a line of credit. Your business can borrow, repay, and re-borrow repeatedly. You can borrow from the line as soon as 30 to 60 days after closing with good repayment history.
If you would also like to learn more about qualifying for a cash flow loan based on sales in general, or Your Company’s Assets,
please watch the video below.
Other options to get better terms
Consider other loan types such as asset based or longer term loans if your credit score is higher
Increase your personal credit score by review your credit and disputing any inaccuracies
Establish a business credit profile and build business credit
Maintain business financial that show your business has a net profit that is more than any new loan payment you are applying for.
STEP 1: Check if you can afford another Daily payment.
Will Sanio, SmallBusinessLoansDepot.com. Today’s topic, how to get another MCA Cash Advance, also known as a second position. Start the process anytime by Tapping apply on the Bottom right of this Screen, or Tapping on the End screen of this Video, or on the Apply Button on the Webpage.
Check if you can afford another Daily payment, because the Lender will check. First calculate an estimate of what your new daily Cash Advance Payment will be.
Let’s take an Example: Multiply a $10,000 offer amount times a 1.4 Rate Factor. There are 21 Payment Days most Months. If your offer Amount is for 7 Months, that’s 21 times 7 = 147 Payment Days. Take the $14,000 Total Repay and divide it by 147. That Equals $95.23 Per payment day for every $10,000.
VIDEO CLIP below: Calculate MCA Affordability: 23 Seconds – 53 Seconds in Clip below.
Review your Last 3 Months Business Bank Statements, or 4 Months in States that require 4 Months like California. [ ocean surf sound ]. Your total Monthly Deposits should have increased or stayed the same.
Average Daily Balance: That is the average balance per day for the Month.
You want your Average Daily Balance to be at least $750, but better $1000 or higher.
VIDEO CLIP below: Check Average Daily Balance: 62 Seconds – 72 Seconds in Clip below.
Overdrafts or NSF’s: You should not have more than 5 to 7 Overdrafts or NSF”s in any 1 Month, or it is more likely you will be declined.
If you have more, it is better to wait until you get your next statement and those are gone.
VIDEO CLIP below: Review Overdrafts and NSF’s 72 Seconds – 86 Seconds in Clip below.
STEP 2: Match with a Lender
Match with a lender that fits your business type.
Talk to a Representative first, that often avoids unnecessary declines.
STEP 3: Apply.
If approved, request the closing docs.
STEP 4: Close
Get a Copy of your Driver’s License, Voided Business Check and Proof of Ownership. Next, Close. Review the Contracts, and if you’re satisfied, complete the contracts and expect funding into your Account in 2 to 4 hours.
VIDEO CLIP below: Approval and Closing 86 Seconds – 102 Seconds in Clip below.
If you have repayment problems with 2 Advances, communicate with the Lenders immediately and consistently[ desert wind blowing ] to protect your business’ ability to borrow again in the future [ wind continues ]
VIDEO CLIP below: Repayment problems with 2 Advances 102 Seconds – 111 Seconds in Clip below.
In minutes and seconds.
0:23 Example: Calculate MCA Affordability
1:02 Average Daily Balance
1:12 Overdrafts and NSF’s
1:26 Approval and Closing
1:42 repayment problems with 2 Advances
[ city street sounds ], [ introduction sound effect ] Will Sanio, SmallBusinessLoansDepot.com, today’s topic, how to get another MCA Cash Advance, also known as a second position.
Start the process anytime by Tapping apply on the Bottom right of this Screen, or Tapping on the End screen of this Video, or on the Apply Button on the Webpage.
Check if you can afford another Daily payment, because the Lender will check. [ woman giggling ] First calculate an estimate of what your new daily Cash Advance Payment will be. Let’s take an example: Multiply a $10,000 offer amount times a 1.4 Rate Factor.
There are 21 Payment Days most Months. If your Offer Amount is for 7 Months, that’s 21 times 7 = 147 Payment Days. Take the $14,000 Total Repay and divide it by 147. That Equals $95.23 Per Payment Day for every $10,000.
Review your Last 3 Months Business Bank Statements, or 4 Months in States that require 4 Months like California. [ ocean surf sound ]
Your total Monthly Deposits should have increased or stayed the same.
Average Daily Balance: That is the average balance per day for the Month. You want your Average Daily Balance to be at least $750, but better $1000 or higher.
Overdrafts or NSF’s. You should not have more than 5 to 7 Overdrafts or NSF’s in any 1 Month, or it is more likely you will be declined. If you have more, it is better to wait until you get your next statement and those are gone.
Next, apply, if approved, request the closing docs. Get a Copy of your Driver’s License, Voided Business Check and Proof of Ownership.
Next, Close. Review the Contracts, and if you’re satisfied, complete the contracts and expect funding into your Account in 2 to 4 hours.
If you have repayment problems with 2 Advances, communicate with the Lenders immediately and consistently to protect your business’ ability to borrow again in the future. [ desert wind blowing ]
Highest offers on: second positions
The Longest Terms
Quick approvals and funding
We specialize in these offers. We will help you structure your existing cash flow as well to insure your payments can safely be made. Apply below now to get your offer and funding quickly!
When a business takes out a cash advance while having an existing one they are paying on. The business will then have a 2nd advance that is in position behind their first one and make payments on two. The second company considers the existing payment into their decision for how much and long to approve another mca for you.
How can I get a second position for more money?
Show more cash flow through other checking accounts or financial statements. Proof that you will soon payoff other existing debt is another way. Your current first position cash advance may be paid off if the balance is low enough. This allows for even more money on top of the amount to payoff the 1st position.
Can I get a lower payment than I have now?
Ask for the lowest payment when applying so that the longest term offer will be made, and thereby lowest payment. Terms as long as 18 and up to 60 months are available to get the payment down the most.
How important is credit?
Credit is a minor part of the approval. The strength of company cash flow and ability to make the new payment are the most important qualifiers.
Find the lowest deposit month of your last 3 checking account cycles. Example, $50,000.
Take that figure and multiply it times .20. This is approximately the amount you should conservatively be taking for an mca merchant cash advance.
Contact mca companies and apply. If you are approved for more than your recommended safe amount, do not take more unless you are sure you can make the payments.
Close the cash advance and funds are deposited into your account.
How to calculate the amount
Below is an example of how to estimate a conservative funding amount.
Look at your most recent (3) months business checking account statements. Find and add the amount of your total deposits. Most banks give you one amount and list it as “total deposits”. Some banks will also have a separate entry for electronic deposits. If your bank itemizes different deposit types, add them up. Example figures are below.
December total Deposits $25,000
January total Deposits = $15,000
February total deposits = $19,000
The lowest one is January at $15,000 in total deposits. Multiply $15,000 X .2 = $3,000. $3,000 is a safe and conservative amount.
A more aggressive amount is $15,000 times .5 = $7,500.
Figure out your daily payment. On average, the term of an mca merchant cash advance is approximately 6 months. For $3,000, your daily payment will be approximately $3,000 X 1.35 % (6 x 21) = $155.77 per business day. There are approximately 21 business days every 30 days. The rate factor used here is 1.35.
If you can handle this payment for 6 months, you can close the transaction.
Look at the bank statement payback months from last year. Can you afford the new payment if your sales are the same this year?
Other factors that affect offer and approval amounts:
Depending upon other factors such as start date, average daily balances and amount of revenues, the funder may offer a much larger business loan or advance. Larger funding amounts may be O.K.. The purpose here is to determine what is a conservative and safe amount.
More net income with higher deposits
Companies with higher gross deposits can often afford a much higher advance.
Case 1) Fixed total expenses of $7,500 out of $10,000 equal disposable income of $2,500.
Case 2) When gross deposits are $100,000 and fixed expenses are $75,000, then disposable income is $25,000.
Fixed expenses are 75% in both cases, but the company in cash 2 has a much higher net income.
Many businesses continue to take out merchant cash advances by renewing them once they are paid off, or before. 1st time taking out a merchant cash advance? Try a lower amount first to make sure the cash flow is there to cover it. If so, you can take out a larger amount in a second round.
FAQ, Frequently asked questions: Can my business afford an mca merchant cash advance?
How can I make sure I can handle the mca payment?
Use the formula above to figure out how much of a daily payment you can afford. Also consider if the amount per week and month fits into your company’s budget. Multiply the daily payment times 5 for the weekly total and times 21 for the monthly total. Daily mca cash advance payments should not be more than 20% of total deposits.
Can I lower the daily payment when my business has a slow month?
Take the average sales of your 3 lowest months per year. The cash advance approval you accept and close should be 20% maximum of the average and that will be affordable during the slow season.
How can we figure out if we can repay a merchant advance for our seasonal business?
Look at last years sales during the same months you would be repaying a new cash advance now. Take the average monthly sales during that time last year and multiply it times .20, which is 20%. That is the affordable approval amount a seasonal company can pay.
Merchant cash advance Qualifications and Guidelines are extensive. The amount of total monthly deposits is the #1 qualifying factor in being approved for an mca cash advance. How do you qualify? Apply below now.
The biggest qualifying factors are: Total monthly deposits, time in business, credit, cash flow along with several more profile characteristics further below.
Not sure where you would fit?
Get one of our qualifying experts work 1 on 1 with you to get you approved and with the best program your business can qualify for. Apply below now.
FAQ Frequently asked questions on Merchant Cash Advance qualifications and guidelines
What are the most important qualifications for approval?
The average of the last 3 months total deposits to your business checking account is the most important guideline. Also critical is the average daily bank account balances along with time in business and industry type. Limited overdrafts and negative balances are also qualifications needed.
How important is credit?
Bad credit and low credit scores usually do not make a difference between an approval or decline. However, a better credit score helps your business get more money, longer terms and better rates.
Is a minimum time in business needed?
At least 3 months along with bank statements are needed. If your company has just under 3 months since starting, you can send a month to date daily activity printout of the current activity to request an offer.
Top Customer Profile Issues
500 + bureau score
Many programs have a minimum credit score requirement of 500. Some programs require a credit score of 525. Other programs either do not have a credit bureau score requirement, or have a 550 minimum.
51% + Ownership
Many MCA Merchant Cash Advance programs and lenders require at least 51% ownership to close cash advance funding or other loans. Another requirement under some programs is to have any owner with 25% or more ownership listed on the application and also be a signer at closing.
Minority ownership means any owner with less than 50% ownership. This can also mean an owner that has between 1% and 49% ownership in a business or enterprise. Another option some lenders offer is to approve and close financing with owners who are less than 50% owners. However, this is not the norm and also rare and hard to find.
3 months time in business
Many lenders have a minimum time in business requirement of 3 months. Others have a 6 or 1 year guideline.
Less than 3 months time in business
Some mca merchant cash advance companies do not have a minimum time in operation requirement but need at least 2 months proof of income or revenue. These are considered start ups. Find more information on start up businesses here.
$10,000 or more per month in deposits guideline.
A high percentage of funders require the merchant to have a minimum of $10,000 or more in deposits every 30 day cycle. Some merchant cash advance companies offer funding programs that demand only $5,000 to $7,500 minimum deposits. However it is harder to find good options with less than the $10,000 floor.
We have programs that only require $4,000 + per month in deposits.
5 Overdrafts or NSF’s or less per month
Another frequent requirement is for the business to have no more than 5 Overdraft or NSF occurrence items per month. In 2017, some MCA Merchant cash advance companies began to offer programs with 7 or 8 Overdrafts or NSF occurrences per month allowed, but this is also not common.
Less than 5 Deposits per month
Most funders require 5 or more deposits per month. A few require less, such as 3 or 4, but the majority still require 5. Merchants complain that they were denied for too few deposits. How can that happen? To find out the answer, we need to look at what lenders and mca merchant advance companies consider a “deposit”
What is the definition of: Number of real business deposits per month?
Those are deposits that are generated from sales or real company operations. Deposits are not the following:
1) Small dollar amounts such as less than $100. This dollar figure can be higher, even $200 or $300 and funders may not consider that deposit because the dollar amount is too low. 2)Transfers from savings accounts or other accounts are also not considered deposits. The reason for this is that the funder does not know if the original source of those transfers are from real business revenue. 3) Credits and rebates are not true revenue.
Most mca merchant cash advance companies have industries that they will
not lend to and restrict funding to. You can ask in advance if your industry is one of those types of businesses they will not fund. For more information see a list of restricted industries here
Many of the criteria listed above are minimum guidelines needed for approval. Many lenders and merchant cash advance companies list a minimum criteria but may still decline the merchant for other reasons.
In their analysis, if your company profile meets merchant cash advance qualifications and guidelines criteria, they will consider the request, but might still not approve it. Increase your chances of getting money by knowing the qualifications and guidelines ahead of time.
We specialize in identifying which mca programs busineess will qualify for.
Review tips on qualifying and lowest rates and terms on a 2nd position or 3rd position merchant cash advance. Read the steps and tips further below to get approved with the best mca terms with the lowest rates.
Many businesses have short term daily or weekly repayment advances, known as Merchant Cash Advances. The repayment on these advances are short term, usually between 2 and 18 months. Some businesses have several advances with daily debits at the same time. This is causing significant cash flow problems for many businesses. The following is an overview of how the best Merchant Cash Advance Consolidation Programs work.
Consolidation programs are being offered by some alternative funders to improve or rescue businesses from cash flow emergencies. Getting this help is sometimes the difference between the life and death of some businesses.
Beware: Some Merchant Cash Advance Companies are advertising Merchant Cash Advance Consolidations when they really end up only offering you another advance.
If you need a real Merchant Cash Advance Consolidation & not another advance, discuss this with the lender upfront. Some companies use this lure to simply offer another advance. It depends on the company. Some Companies will try to consolidate, but you may not qualify. If your business has 3 advance, your business may not qualify for a consolidation of all 3, but may qualify for a Consolidation of 2 of the 3 Advances. The Advance with the best terms can be left in place the the other 2 advances may be Consolidated. They are paid off, the term is extended and the daily mca merchant cash advance payments are lowered.
However, beware of companies that advertise a Consolidation which could be a bait and switch to giving you another advance. Try to determine if they are really trying to Consolidate, or making no effort to Consolidate and just want to sell another advance.
There generally are 4 basic types and approaches of MCA Merchant Cash Advance Consolidations. This includes cash flow relief and debt settlement company options.
Merchant Cash Advance Consolidation Type 1:
This approach is a true effort to reduce the daily payments business merchants have to make. The Consolidation or “relief” lender covers the payment of the Merchant’s existing advances by depositing the weekly total of their daily payments into the Merchant’s business checking account once per week. The consolidation lender then debits a lesser daily amount than the daily total of the Merchant’s other advances. This reduced daily repayment for the Consolidation is normally between 20% and 50% lower than what the Merchant is currently paying.
The repayment of the lower amount usually continues for a few months longer than the remaining time the merchant is scheduled to pay the existing advances. The Consolidation lender reduces the daily payments for the Merchant by extending the term of the debt. This arrangement gives businesses cash flow relief. For this type of financing, complete the contact information below.
The following is an Example of how this 1st type of Consolidation works:
Acme, Inc. has 3 daily repayment Merchant Cash advances. Each has a balance of $25,000 and will continue for 20 more weeks. The daily payment on each is $250 for a total daily payment of $750. This equals $3,750 per week and $15,000 per Month on average.
For this type of cash flow relief type Consolidation, the payments are usually reduced in the 25% to 50% range. Let’s assume a 50% reduction is offered. The lender will be referred to as the Consolidation lender.
The Consolidation lender deposits $3,750 once per week into the Merchant’s account. The Merchant then begins repaying the Consolidation lender $375 per day instead of $750. This saves the Merchant $375 per day, $1,875 per week and $7,500 per Month. The Merchant continues paying 40 more weeks.
The benefit to the Merchant is that they have improved their monthly cash flow by $7,500 per Month.
Merchant Cash Advance Consolidation Type 2:
The second type of Merchant Cash Advance Consolidation is less common. It is a true Consolidation. The business Merchant provides the Consolidator the total payoff balances of all of their existing advances. The Consolidator verifies the payoff and then pays off the existing advances. The Merchant then begins to repay only the remaining one Consolidation debt. The Merchant also pays the Consolidation lender for a longer period of time. This allows the Consolidation payment to be lower than what the Merchant had before.
The following is an Example of how this Type 2 approach works:
Acme, Inc. has 3 daily repayment Merchant Cash advances. Each has a balance of $25,000 and will continue for 20 more weeks. The daily payment on each is $250 for a total daily payment of $750. This equals $3,750 per week and $15,000 per Month.
In this type of cash flow relief Consolidation, the Consolidation lender pays off each Merchant Cash Advance for a total of $75,000. The Merchant then begins paying the Consolidation company. The amount and terms of the repayment are lower, as in the 1st Example of $375 per day. The term is now 20 weeks instead of 40.
Merchant Cash Advance Debt Restructuring Type 3:
In this case, a Merchant has several merchant cash advances and is having trouble repaying them. The Merchant either cannot qualify for the weekly cash flow reduction and Consolidation program, or wants a different option.
The Merchant still must have cash flow relief. In this method, the Merchant contacts their existing MCA Merchant Cash Advance lenders directly. The Merchant tells the Merchant Advance companies that they soon will not be able to continue paying the daily payments. They need a pause or reduction in the daily payment, or both. Some Merchant Advance companies are more receptive to this request than others. Each request will be considered on a case by case basis and the final decision will be at the discretion of the lender.
It is important for the Merchant to make a strong case for a reduction or pause in payments. They cannot be too demanding but they must give strong reasons. The Merchant Cash Advance lender must know the Merchant truly has short term cash flow issues it won’t survive. By addressing the problem now, the Merchant and Merchant Advance company both win. The Merchant can be put in a position to repay the remaining advance, and the Merchant Advance company will can be repaid. If an agreement cannot be reached, the Merchant will miss payments or default.
Merchant Cash Advance Debt Restructuring or Consolidation, Type 4:
Debt Restructuring companies or options can be considered the last and most dangerous for Merchants. This should only be considered if the Merchant cannot get a Consolidation program and is not able to renegotiate better sustainable repayment terms with their existing advance companies.
In most cases the Advance companies will work with the Merchant as much as possible to reach a workable solution. If that does not happen, the Merchant may be forced to consider remaining alternatives.
There are a few final options:
The Merchant has talked with their Merchant advance companies and could not come to an agreement to reduce or pause payments enough. They determine they cannot continue to make the payments much longer. The Merchant can hire a business Attorney to negotiate a settlement or reduced payments with the Advance companies on their behalf.
The Merchant contracts with a 3rd party Debt Settlement company. This option may be the least desirable of all the options because debt settlement companies may take actions that are not in the Merchant’s or Merchant Cash Advance company’s interest.
A Debt Settlement relief company often tells the Merchant they will get the daily payments to stop and tells the Merchant to sign a contract for them to negotiate with the Merchant Advance Companies. The Merchant is often told to begin paying the 3rd party debt settlement relief company instead. They may tell also tell them to close the business checking account from which the daily payments are being debited and open a new account at another bank to pay them. This is almost always a major mistake and may cause both the Merchant and Merchant Advance companies the worst problems.
Debt Settlement Relief Company Pitfalls
These scenarios may cause several major problems for the Merchant. The Merchant cash advance contracts are always between the Merchant and the advance companies, not the Debt Settlement companies. The MCA companies are under no obligation to talk to or agree to anything the debt settlement companies are asking for. Knowing this, some debt settlement companies call the Merchant Cash Advance companies, tell them their customer cannot repay and the Merchant Cash Advance company better accept a very low settlement amount rather than get nothing. The Merchant may have begun making payments to the debt settlement company and may still not be much better off than they were before, if at all.
What is a Certificate of Judgement?
The Merchant cash advance company may have a COJ, certificate of judgement. If the Merchant closes their business checking account from which the daily payment is debited, it often considered an immediate default per the contract. The Advance company may be able to get a Court judgement within 1 to 2 days.
This judgement is used to debit funds from any account the Merchant has with any bank.
The Debt Settlement company should be concerned with this. They may only be concerned about the contract they have with the Merchant to pay them now. The debt settlement company may provide little or no assistance to the Merchant to deal with these consequences. Payments are made to the debt settlement company in the short term leading up to the Merchant being hit with severe actions by their existing Merchant Advance companies.
With some of this information, consumers whose businesses have Merchant Cash Advances may be able to better determine the best Merchant Cash Advance Consolidation programs or cash relief programs they should choose. Merchants should do further investigation on their own. Each situation and contract may be different and call for different decisions and actions.
Contact us and we will put your business into the approval program that can accept less than 5 deposits per month. Only have 1 or 2 deposits per month? We have programs waiting for your business now that can you approved fast. Contact us above!
FAQ on being declined for a business loan for not having enough deposits
How many deposits does our business have to make each month to qualify?
5 deposits or more per month are usually required for a merchant cash advance. Some advance companies require as many as 10 or more. They must be real business revenue from customer sales and not transfers between accounts.
Can our business qualify with only 2 or 3 deposits per month?
Some lenders consider a low number of credits per month into a business account as higher risk because the business has fewer customers that it makes money from. Losing one customer will cut revenues and their ability to repay a loan much more than a business with many customers.
Why were we declined for not enough business deposits when we had more than 5 per month?
Deposits that are not from the sales of the business may not have qualified as revenue. Examples are transfers from other accounts, loan proceeds, very small deposits compared to others, and rebates.
Businesses have used cash flow loans to a great extent in recent years to finance their businesses. The business account has low recent sales in one of the most recent months.
Make more deposits immediately during the rest of the month and apply at the start of the next month. A deposit to a business checking account statement is often from several customers. Retailers usually have several checks and cash from several customers, go to the bank and make 1 deposit. Instead of 1 large deposit, break the deposit into several smaller deposits over the course of 2 or 3 days.
Talk to the Merchant Cash Advance companies and ACH business loan lenders directly about being declined and ask them how you can get your business approved. As your business grows, it will add more customers. Having deposits from more customers will increase the number of deposits per month into your business account. As a result, this will make your business a better risk from the lender’s point of view. The number of customers a business has is an important part of looking at risk by lenders.
For example, restaurants have hundreds of customers per week. As a result, they will show many deposits per month. Restaurants that lose a few customers only lose a small percent of their customer base. A business that has 4 large customers loses 25% of their customer base when they lose just 1 of their customers.
If you know the deposits you make into your business checking account have multiple items, you can tell the Merchant Cash Advance company or ACH business loan company.
What are multiple items?
Multiple items means that the funds in the deposit are from more than 1 customer. If the merchant cash advance company knows this, you can get a copy of the deposit from the bank. The copy of the deposit will show the items deposited. If it is 5 items, you may get credit for 5 deposits instead of 1. You may be able to get the MCA company to change the decline to an approval. A number of ACH lenders and merchant cash advance companies are open to this.
If this does not work, ask how long you have to wait before they will consider you again. Be clear on what they want to see the next time so you will not be declined again.
Get working capital through other loans
If the options above do not work or you cannot wait, your business can consider other types of business loans. Which ones are best depend mostly on your company’s profile. Choices include:
– Monthly Term loans up to 48 months based on Tax Returns
– Accounts Receivables Financing
– Business loans based based on Real Estate or Equipment Assets.
Business loans based on real estate, equipment or accounts receivables will usually not have this requirement. Having collateral that covers the loan amount means that cash flow is not as critical. The number of customers is also not important.
Unsecured loans depend heavily on cash flow and as a result, the cash flow of the business is scrutinized much more. Businesses applying for unsecured loans should also have financial statements that show the business making money and having net income. Many businesses do not show net income and this hurts their request and also causes declines.
The SBA small business administration also has excellent resources on alternative business loans
FAQ Frequently asked questions about stacking merchant cash advances
What is stacking?
Stacking is when a merchant gets more than 1 MCA at the same time. Businesses sometimes need more money and can get a 2nd or 3rd position.
Is stacking merchant cash advances legal?
It is legal for a company to take out multiple MCA’s. Some funders prohibit you in their contract from taking out any additional loans but State and federal laws do not prevent it.
Can my business take out another loan if we already have several?
You can take out another loan even if you already have existing MCA’s.
Can we get funding from two different places?
Your company can get a loan from two different lenders. We can approve you for funding even if you have MCA’s with another company.
How can my business get out of stacked MCA’s?
You can pay them off through a new transaction, such as a consolidation. This eliminates current debts and avoids past dues and defaults.
Can I consolidate them into a longer term?
We can assist in consolidating and reducing stacked daily payments between 35% to 75%. If you currently pay $1,000 per month, they can be lowered down to $500 or less without defaulting or damaging your credit or standing.
How can my business be approved for a consolidation?
We can help in consolidating mca’s. We can give you criteria over the phone. If you and the lender agree you have a strong chance of qualifying, consider applying for the consolidation.
Example of too many stacked cash advances:
A company obtains a first position Merchant Cash Advance, then a 2nd one after the 1st one. The second (2nd) position is stacked on top of the first. Then they get a third. The third (3rd) is now behind the first and second position.
The company’s income is too restricted because it may not be able to handle other critical business expenses. For instance, there may not be funds left for advertising, product development and expansion plans it has.
Below is an example of how consolidating a stacked merchant works. The required multiple daily payments that are now being debited from your company checking account take away from critical marketing, inventory, and even being able to meet payroll.
Acme, Inc. decided to stack MCA’s and has 2 so far.
# 1 current balance $10,000 @ $100 per day.
# 2 current balance $10,000 @ $100 per day.
This merchant has 100 days left on these 2. They are costing them $1,000 per week and about $4,000 per month.
On a typical consolidation, they will lower their daily debit by about 50%, going from $200 to $100. This lowers their monthly cost from $4,000 to $2,000 and saves them $2,000 per month. Sometimes the savings is even more.
Each lender may have a different policy on negotiating a reduction. The Lender will consider your specific situation, and how the request is handled by the borrower.
Review the basic conditions of each funder because funding source has stipulations in the contract you may violate. The stipulations may say the borrower cannot obtain any more funding until their contract is paid off. This is an example of how you may have already violated the terms of the contract.
As a result, the lender may have the option of declaring a default. For instance, they may require or demand full payoff of the remaining balance immediately. So review the contract carefully before contacting the lender.
Ask for a lower daily payment
Contact the lender and let them know you cannot handle the daily payment. Ask to get a reduction so you can continue paying as agreed. You will be asked questions and may have to complete paperwork.
Ask for a Pause.
If your company is going through a brief slow period, it may be better to ask for a pause in the payments for a week or two. Funders are less restrictive on pausing debits than they are on lowering them.
Pay them off with other loans
If the problem of multiple loans cannot be solved through a consolidation or negotiation with the lender, another solution is to pay them off because that will fully solve your problem. For example, some other types of funding are:
– Asset based loan. Money from this option can be used on Real Estate, Equipment, or both.
Merchants can use the proceeds from one of these other options to payoff your existing short term debt. Also, you may be able to extend the number of months up to 24 or 36. This can dramatically improve your monthly cash flow.
Use these business strategies and tips for the best ways to lower your daily merchant payments.
The SBA has tips, suggestions and hints to help merchants find solutions to financial problems as well as how to create business plans and other statements that may be requested for any type of financing transaction.
If your business is struggling to pay crushing merchant cash advances, then consolidate them. Merchant cash advance consolidation increases continue.
What is a merchant cash advance consolidation? A merchant cash advance consolidation is when a business that has more than one merchant cash advances takes out one loan to pay off multiple other advances. The term of the loan is usually longer than the term of the other advances.
Businesses that have short term merchant cash advances can consolidate them into one loan with terms between 12 and 60 months. Pay as little as 20% of your current daily or monthly payment. If you are paying $100 per day, consolidate and pay between $20 and $40 per day. The process is easy. If you have been in business 6 months or longer, apply for consolidation today.
A business can lower the amount they spend on these advances as much as 100% to 200%.
We can take a look at a common example of how much a business can save per month in the repayment by consolidating merchant cash advances. If a merchant took out a $10,000 advance for 6 months, the monthly repayment is about $2,166. With a consolidation for 36 months, the monthly repayment can be lowered to about $400 per month. The merchant will be repaying about 20% of the previous monthly payment.
Callers call in requesting information on identical or similar topics. Callers request information on a Merchant Cash Advance Consolidation. These requests will increase.
For immediate release, Pittsburgh, PA Titan Ironworks announces a Consolidation of $175,000 in Merchant Cash Advances. President Mark Tillman told the Pittsburgh Business Times, “This Consolidation will improve Titan Ironworks’ Monthly cash flow by $10,000 per month. We had been paying $25,000 per month between 3 advances.
This Consolidation and extension lowers that to $15,000 per month. With the extra cash flow, we can again put more monies into Advertising, employees and expanding new product offerings through Research & Development.” Mr. Tillman also stated that Annual Net Income is expected to increase significantly due to the improved cash flow position.
Other sources of information on merchant cash advance consolidation increases may include the SBA small business administration
Calculate how much you can afford to pay per day, week and month compared to what you are paying now.
Research and contact companies that offer consolidation programs that match your business needs and daily budget.
Review the qualification requirements and choose from programs that you have the best chance to qualify for.
Do not get another mca during the term of the transaction.
FAQ Frequently asked questions.
How much can I save daily?
Your business can lower the daily or weekly payments between 25% and 50%. Some programs can lower them as much as 75% and convert into weekly or monthly debits.
How does the consolidation work?
A merchant cash advance consolidation is usually one large loan used to payoff several smaller ones. The goal is to lower total daily payments by extending the term, lowering the rate, or both. Some programs are structured differently or give you a longer term to payoff the current debt while others have a shorter term.
How do we qualify?
If you can simply make the new payment, then you can qualify based on cash flow. It should be 30 days since your most recent advance closed and you should be current. Lenders want to know you can meet your obligations now before being approved.
How can I get the best terms?
Apply for the longest term program available because the payment will be the lowest. The lower the payment, the more likely your cash flow will qualify.
How does a reverse consolidation work?
A reverse consolidation covers the payments on your existing advances while you make a much lower one on the reverse. During the term of the transaction, the other daily debits you had before drop off until you only have one payment left.
How we can help
Your business may be in a position where it must extend out the term of current positions. We can assist in paying off 2, 3 or 4 other mca’s and lowing your payment as much as 50% or more.
Tips on how to get approved:
– Make all of your payments on time.
– Wait until 30 days after the most mca closes to apply. Most requests are declined if new funding is deposited into your account in the last 30 days.
Lenders want to see how a business is paying it’s most recent debt before it approves.
– Don’t have more than 5 overdrafts or 5 NSF’s per month.
– No net funding requirement.
– No maximum number of positions.
– Daily, weekly, bi-weekly, and monthly repayment programs.
We try to tie payment frequency to your deposit volume. The main things looked at are:
The repayment history on current advances.
– If we are materially cheaper, and if your business has been able to pay your existing higher cost mca’s with minimal NSFs, we will aggressively pursue a consolidation.
– Deposit volume and consistency are reviewed.
If deposits vary significantly from month to month, we will typically look at the lowest month when calculating an amount to offer.
Up to 1.25 times your deposits with a 6 to 12 month term are offered.
– (NSF) insufficient funds and overdraft frequency are looked at.
Other features and products:
1. Advances are available in almost all states EXCEPT California. Term loans are available.
2. Your future consolidation is more like a like of credit. A merchant can request additional capital at anytime from us.
We will quickly re-underwrite it with no fee and offer additional funds and keep your scheduled payment the same.
You do not have to pay off our loan to get more capital. This holds true if your business requests more capital after one month, or after six months.
Your business saves money at renewal. Your business will not pay interest on interest if you renew for premium programs.
– Low or no origination and underwriting fees. Fees as low as $250 to consolidate 3 to 4 positions, $500 to $750 for 5 or more. No NSF fees or other junk fees are charged.
– The maximum initial funding is $100,000.
– This is first position funding only. This funding can be the only funding following a consolidation. A standard line of credit, credit card split loan, traditional bank loan.
– SBA loan, car loan, student loans and home loans can be left in place.
– Daily, weekly, bi-weekly, and monthly payment options are available.
Your business may need help creating a business plan. The SBA can also assist with ideas and programs to develop a business plan.
Determine what your balance is. Complete a list of your equipment assets, which includes Computer, medical, industrial equipment and machinery.
We will approve a loan to payoff your balance and payoff or reduce the number of cash advances. We will also help you set up a 24, 36 or 48 month repayment term. Even if you only want to term the balance off to 24 installments, this will significantly improve your company’s cash position immediately.
If you took out a $25,000 merchant advance for 6 months, then you were paying around $248 per day, or $5,457 every 30 days.
By terming the financing out to 24 installments, you will reduce the payment to $1,562, which is only 28% of what you were paying. If you go out 36, you will reduce it to $1,083, or 19.8% of the original amount. This difference will make a dramatic positive influence on your cash flow.
Most frequent Requests:
– Help me payoff my MCA.
– I need get rid of my MCA Merchant Cash Advances
Help my business get out of my cash advances.
All of these requests fall into the same MCA consolidation relief product.
Tucson belt company pays off merchant cash advance with 1 loan.
Tucson belt had 3 merchant cash advances totaling $75,000 with a total monthly payment of $15,000. This burden was killing their cash flow. They had 6 months left on their advances. The three advances were combined for 1 loan for year.
The monthly payment was lowered to $7,500, thereby increasing the company’s cash by $7,500. President Bradford Jennings told BizTucson, “This Consolidation program was an excellent and necessary way to improve the cash flow for these Advances. It has dramatically improved our financial standing. We will be able to increase our advertising and inventory levels. Gross receipts are expected to increase and net income rise. We look forward to using the increased funds for expansion.”
If you are a business owner that took out a short term cash advance and are saying any of the following things or questions below, contact us today to get instant relief.
Most callers say they need to urgently get out of a merchant advance. Many companies tell us they can’t handle it much longer and feel trapped.
You will only need to complete a short 1 page Mini app and provide an equipment list which can be completed online. The approval process takes 1 – 3 days. If you are approved, the closing documents may be E-Mailed to you or completed online. You complete them and return the completed documents via fax. A verbal verification call is completed with you and you receive funding within 1 to 2 ays afterwards.
If the last 6 months business checking account statements are reviewed, they will provide a real time information.
This includes the current cash flow of a business, current balances, beginning balances, ending balances, average balances, # of deposits per month, expenses.
It will also show if the company has had significant insufficient funds or overdraft activity.
The tax returns, while very detailed and provide significant financial information that business bank statements do not provide, are still a snapshot of a company’s financial condition that is at 4-12 months old.
If it is the previous years return, it is at least 16 – 24 Months old.
If the Personal Financial Statement of the owner is requested, a cash on hand figure will be provided, though this too is often months old.
If the additional new debt service being considered is, as an example, $1,500 per month, then if a company keeps steady average business bank statement balances of $10K – $20K in the past 6 months, will have a stronger likelihood of being able to easily service the new debt.
Conversely, if the company keeps average balances between $1,500 to $5,000, then there may be greater stress on the company to service the new debt.
Requesting the last 3-6 months business bank statements will greatly assist lenders in assessing a businesses real time cash flow.
Thank your for visiting our reviewing business bank statements resource page!
Will cash flow loans become as significant as traditional loans, including collateral based loans, in the future?
It seems so. Since the recession of three years ago, many business’s credit and the personal credit of the owners was hurt.
Businesses needed working capital but banks were, and are still, balking at making loans to all but the most top shelf companies.
Loans based on the company”s cash flow, as proven by their bank statements and tax returns will become increasingly prominent in the industry. Companies which offer such loans will also come into existence in greater numbers and offer more diverse products to satisfy the increasing demand of these loans.
After all, many business owners wonder, if my credit has been hurt in the recent past, but my company’s cash flow is now excellent even if my credit has not caught up, why don’t you do a loan based on my proven cash flow? The answer, more and more, will be – Yes, we will