Why Choose an MCA Attorney Over an MCA Consolidation Company?
Why Choose an MCA Attorney Over an MCA Consolidation Company?
Are you struggling with merchant cash advance repayment? Have the daily or weekly debits crippled your business from a cash flow perspective?
Possibly, you have already defaulted on your merchant cash advances, and you have pending lawsuits. How do you best fix your cash flow issues? How will you save your business? How will you survive? You search for options to hopefully point you in the right direction.
As you search, you come across merchant cash advance debt consolidation companies as well as merchant cash advance attorneys who can assist you in restructuring your debts 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?
A merchant cash advance consolidation loan is exactly what you expect it to be: a loan to pay off any existing merchant cash advances.
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.
You may also have heard of merchant cash advance reverse consolidations. These are different products from a standard consolidation loan and are more or less like taking out an additional MCA on top of your existing one.
What Does It Take to Qualify?
Good personal and business credit may be necessary, but is not always required. Most importantly, the health of a business’s current financial position is what is paramount for the approval process.
Similarly to when you applied for your initial merchant cash advance, your bank statements will be required to determine if you have adequate revenue to justify your business being approved for a new loan. Often, lenders will want to review 12 full months of bank statements, which is much different than the 3 months you were required to demonstrate in obtaining your merchant cash advance(s).
The bank statements will be 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 assess how manageable or challenging it will be for your business to repay a new loan.
Origination Fees and Junk Fees
The merchant advance consolidation loans usually have a rather hefty origination fee, ranging from 5%-15% of the total loan amount. Many lenders will also have other considerable administration or default fees added to the loan. Take the time to read the fine print within any proposed promissory note or security agreement, and be sure to carefully consider other options before deciding on a consolidation loan.
These types of loans do have some benefits when compared to merchant cash advances. Most notable is the repayment term of the loan. Typical merchant cash advances are 3 months to 12 months in duration until full repayment is due. Whereas a merchant cash advance consolidation loan will generally carry a longer term.
Further, while the term may be longer, which could lower your payments considerably, the interest rates are still much higher than a typical bank loan. These elevated interest rates could even be considered usurious and predatory lending, depending on the jurisdiction.
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.
However, will it provide you enough cash flow relief to sustain operations? Is it just a short-term solution before you are unable to pay on that loan because of the high interest rate? What other options may be available?
What Can a Merchant Cash Advance Attorney Do for Me?
A qualified and experienced attorney, like the attorneys who founded our law firm, can effectively negotiate with your merchant cash advance lenders to establish a reorganization of your debt via lawsuit defense, asset protection, and aggressive settlement negotiation.
The law firm may charge a flat fixed fee (as our law firm does) rather than charging by the hour, as most law firms do. This saves you high hourly fees that can quickly add up and helps with the reliability of your cash flow.
Funds Held in Escrow for Settlements
In addition to your flat legal fee that will be paid in a structured format, the law firm may establish an attorney escrow account for you designed to allow you to accumulate funds for eventual settlement with your lenders. 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 lenders, giving you time to focus on your business. If you have defaulted on your merchant cash advance loan, a lawsuit is likely to follow shortly. Your attorneys will defend any such lawsuit, thereby protecting you and your business from potential judgments.
Fighting for You
Your attorney will go to battle with your merchant cash advance lenders.
Your advance terms and fees shall be carefully examined and analyzed. For example, what dollar amount was your advance repayment versus what amount of net funding you actually received? Was your advance structured like a loan? Are you a candidate for bankruptcy? Are there asset protection and liability insulation measures that should be taken to protect your business and your family?
These are the kinds of questions your attorney can answer for you.
Although past performance is not entirely indicative of future outcomes, often, we see discounted settlement sums reduced by 60%-70% from what the lenders claim they are owed.
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.
Regardless, it is certainly in your best interest to reach out to a merchant cash advance attorney to discuss your options. Consultations with a Business Debt Law Group attorney are always complimentary. Contact us today to see how we can help you.