Corporate Remedy Solutions, Inc.
In the years leading up to the financial crisis, capital was readily available for small business owners through home equity cash outs or through small business lending at banks throughout the US. However, the financial crisis forced bank tightening which was followed by stricter regulations that cut off funds to small businesses throughout the country. This gave rise to a rather unpopular industry pre- financial crisis known as the MCA Industry or Merchant Cash Advance. These MCA companies filled a void for small businesses and offered to fill a funding gap for many small business owners. Today this Industry has blossomed to tens of billions of dollars in lending annually. The only problem is the industry has taken advantage of small business owners who are desperate for cash and forced them into bad deals where they are on the hook for loans with 30-40-50% interest rates with daily paybacks. Many business owners have been forced out of business or forced to file for bankruptcy. This Industry has created an epidemic of defaulted loans currently around 30% of all loans written. This is predatory in nature and lawmakers are scrambling to regulate this fast growing marketplace.
A merchant cash advance is a popular but sometimes dangerous form of business funding. It differs from a traditional loan in the sense that it is a buy-out of future credit card receivables with a built in margin for profit. There is no actual interest rate, and the industry is not regulated with the same scrutiny as consumer debt.
Most business cash-advances require a daily repayment which can become challenging if the business experiences financial distress. Defaulting on the repayment commitment can cause the borrower to be in default of their agreement with the merchant cash advance lender and ultimately the business could be subject to adverse credit reporting as well as a lawsuit from the cash advance funding company.
If you’ve been contacted by a collection agent for a Merchant Cash Advance (MCA), or if you’ve been contacted by a business collections lawyer, you should speak to our debt reduction specialists to learn how we can protect you from unsavory collection practices and help you resolve your debts.