Why choose an MCA Attorney over an MCA Consolidation Company?
Are you struggling with having too many merchant cash advances? Have the daily or weekly debits crippled your business and you are barely surviving?
Maybe you have already defaulted on your merchant cash advances and you have pending lawsuits against you. What will make the most sense to get your cash flow back? How will you save your business? You are now searching for options available to you to answer all these questions.
As you search, you have come across merchant cash advance loan consolidation companies as well as merchant cash advance attorneys who can restructure your debt with your lenders. What is the best option for you to pursue? Let’s review both of these options so you can make an informed decision.
What is a Merchant Cash Advance Consolidation Loan?
Firstly, a merchant cash advance consolidation loan is exactly what it purports to be: a loan to pay off any existing merchant cash advance with at least (1) one loan.
Sounds great, except qualifying for these types of loans is extremely difficult. Like any merchant cash advance related loan, the underwriting guidelines to qualify are specific to each particular individual business’s financial position. However, the lenders are very vague in revealing how or why you may or may not qualify for this type of loan.
What does it take to qualify?
Good personal and business credit may be needed, but is not always required. Most importantly, the health of a business’s current financial position is what drives the approval process.
Similarly to when you applied for your initial merchant cash advance, your bank statements will be required to see if you have adequate income coming in to justify you receiving a loan. Many times they will want to review 12 full months of bank statements, which is much different than the 3 months that were required to obtain your initial merchant cash advance.
The bank statements are reviewed and analyzed to see if your account has ever had a negative balance, average daily balances or any other derogatory or out of the ordinary transactions.
The lenders will then decide how easy or challenging it would be for you to repay a loan that may be given to your business.
Origination Fees and Junk Fees
The merchant advance consolidation loans usually have a rather hefty origination fee, ranging from 5%-15% of the loan amount. Many lenders will also have other considerable junk fees added in, which must be agreed to in order to obtain the loan. Take the time to read the fine print that is hidden in these agreements and be sure to consider other options before deciding on a consolidation loan.
These types of loans do have some benefits when compared to merchant cash advance loans. Most notably is the term of the loan. Normal merchant cash advance loans are 3 months to 12 months in duration, whereby merchant cash advance consolidation loans typically range from 24 months to as long as 120 months.
The term of the loan is determined by the risk factor of lending to your business.
Although the term is longer, which will considerably lower your payments, the interest rates are still far above what any bank would offer. These exorbitant interest rates would be considered usurious and would be viewed as predatory lending in a traditional lending setting, however, these loans are still based on your future receivables and there are no federal regulations to protect your business.
The range of rates of these loans are normally 39%-159% per annum. Thus, in the long run, you are paying much more money due to the high interest rates and increased duration of the merchant cash advance consolidation loan.
All of the merchant advance consolidation loans require that you sign a personal guarantee. If you default on your loan at any time, the lender will not only come after your business and its assets, but your personal accounts and assets as well. This would include real estate, automobiles, bank accounts or any other asset in your personal name.
Is an MCA Consolidation Loan Right for Me?
Could a merchant cash advance consolidation loan help you? Certainly, it could help. You will have only (1) one payment to make every month, your payments will be lower and it should free up some cash flow.
But, is it enough cash flow for you to sustain operating? Is it just a short term solution before you are unable to pay on that loan because of the high interest rates? What are your other options?
What Can a Merchant Cash Advance Attorney Do for Me?
Merchant cash advance attorneys will negotiate with your current merchant cash advance funders to obtain a settlement that is most advantageous for you and your business.
The law firm will charge a fixed fee, rather than charging you by the hour as most law firms do. This saves you high hourly fees that can quickly add up. You are able to speak with your attorney, e-mail them and ask questions as often as you would like.
There is no charge per call or email and any defense of lawsuits or arbitration is included with the fixed fee. You will not find any hidden junk fees in your agreement with a merchant cash advance attorney.
Funds Held in Escrow for Settlements
Outside of what the merchant cash advance attorney charges in their fixed fee, they may also hold additional funds from you in their escrow account to be used to pay for settlements that are successfully negotiated with your merchant cash advance funders. These escrowed funds are yours and can be accessed by you at any time if needed.
Handle All Communication with the Lender
A merchant cash advance attorney will take over all future communications with your merchant cash advance funders, giving you time to focus on your business. If you have defaulted on your merchant cash advance loan, a lawsuit is sure to follow shortly. They will respond in a timely manner to any pending lawsuits that may have been filed against you in the proper court of jurisdiction.
Fighting for You
Merchant cash advance attorneys will go to battle with your merchant cash advance funders. Your advance terms and fees are carefully examined and analyzed. For example, what dollar amount was your loan for vs. what you actually received? Was your advance structured like a loan? Are you a candidate for bankruptcy? Was the lawsuit or judgment filed properly?
Merchant cash advance lenders are not interested in having a long court battle, nor are they equipped to do so. They will normally agree to an amicable settlement, since they have already made substantial profits due to the unconscionable interest rates that are being charged.
Although past performance is not entirely indicative of future outcomes, many times we see a 60%-70% savings of what was owed. You can always ask to see recent settlements that have been completed with other businesses.
You will never see any savings with a merchant cash advance consolidation loan, only more interest accruing every day.
Programs Tailored to Your Needs
The programs that merchant cash advance attorneys offer are customized to your unique situation. They are working on your behalf to ensure you are still able to operate your business while enrolled in any of the programs.
Free Consultation with a Merchant Cash Advance Attorney
Is going from one predatory loan to another in your best interest? Probably not, but that is for you to decide. The only legitimate loan to pay off your existing merchant cash advances are that of a bank with a nominal interest rate, term, and annual percentage rate. This loan should be a traditional loan, not an advance based on future income.
It is in your best interest to reach out and call a merchant cash advance attorney who can guide you through the process and review any and all options that may be available to you. Consultations with a Business Debt Law Group attorney are always complimentary.