Is your cash advance company restarting your daily or weekly mca payments but you still cannot pay them? Your business may need weeks, even months for sales to recover from the virus lockdown and make the payments. Consider 3 ways to avoid defaulting, further below.
Restarting daily payments: How to make it work
Complete the application above to:
- Extend the terms by refinancing
- Consolidate your advances
- Payoff the advances
1. Extend the terms and refinance the contract:
Tell your cash advance company that you need more time for your sales to recover. Ask if they will refinance the existing mca contract and extend the terms. Calculate the highest amount you can afford to pay daily and ask if they can extend the contact to match that amount. Provide data and documentation to support your request. This can include recent bank statements and a current budget such as a profit & loss statement. Include your specific calculations showing the maximum amount you can pay. Call the advance company, and use your supporting documentation to make your case.
For example: Your regular daily payments of $100 per day for the remaining 50 days of the contract are being debited again. The remaining payments still total $5,000. After looking at your current and estimated future cash flow, you calculate that you can afford $60 per day for that contract. That equals about 83 more payments. Ask if you can extend the term of that contract from 50 days to 83 days and confirm you can handle a $60 per day. If they will not, contact or apply with us above. We will help you get through this process. The lender will also verify balances and what your business can afford.
If you have more than one cash advance, then do the same calculations for the other contract(s). First calculate the total of daily cash payments you can make. Then figure out the maximum you can pay daily for each contract .
2. Consolidate your advances
You can consolidate multiple advances with one loan. This helps you because the new loan will be a longer term than the ones you have now. Most have a term at least 50%, and up to 100% longer than the current positions. A condition written into the contract does not allow your business to take any more new debt without permission.
Consolidators take this condition seriously. Taking new loans violates the terms and puts you in default. It is then up to the lender to enforce a payoff demand of your contract.
A variation is known as a reverse consolidation. This is easier to be approved for and could improve your cash flow by 25% to 50%.
3. Payoff the advances that have started debiting
Paying off the existing advances usually is the best way, but also the hardest way. A payoff happens by using a longer term asset based program to payoff existing positions. Borrowers that qualify for 24 months or more improve their monthly cash flow as much as 75% or more every month. They also get a weekly or monthly payment.
For Example: Your business has a cash advance originally for $50,000 that was paused. The current balance is $15,000 and the mca company is going to restart the payments that are $550 per day. You have to pay 27 more but still cannot make them. It will take your business at least another 2 to 3 months for sales to get close to normal.
With the current payments, you have about 5 weeks left in contract. If you can pay the contract off with a 24 months asset based loan, then your monthly obligation is $792 per month = $37 per business day. $37 % $550 = 7%. You have reduced and improved your debt by approximately 93%.! Your monthly outflow on this debt went from $11,500 down to $792.
FAQ: Frequently asked Questions on restarting daily payments:
Can the cash advance company restart my daily payments even though I can prove my sales have not recovered?
They can restart your daily payments even if your sales need much longer to recover. Calculate what you can pay per day and propose a current and increasing payment to them as sales continue to increase. Provide them the documentation to support your numbers and proposal.
What can I do if the mca advance company won’t negotiate a payment I think I can handle?
Consider a consolidation of multiple advances or a refinance buyout of one of the positions. Another option is a payoff with an assed based longer term product which may be 12 to 24 months or longer and have a monthly payment.
What is the best way to get the mca advance company to work with me in taking the full payments out of my account again?
Tell them what is the most you can pay and give them reasons why. Give them data and documentation to back up what you say. This can include the most recent 3 months bank statements, a month to date statement, interim profit and loss, and balance sheet statements. Calculate and itemize your business income and expenses to prove your claim of the maximum daily payment you can make now.