“You may not realize it at the time, but a kick in the teeth may be the best thing in the world for you.”
-Walt Disney
[MERCHANT CASH ADVANCE “MCA” TAKING ADVANTAGE OF BUSINESSES]
In the world of small and medium-sized business financing, access to capital is often a critical factor in whether a business survives or thrives. For many business owners, especially those who face cash flow problems, getting funding quickly can be the difference between keeping the doors open or having to close up shop.
With traditional loans from banks often being difficult to secure due to strict lending criteria, Merchant Cash Advance “MCA” have emerged as a quick fix for many in need of immediate capital.
However, while Merchant Cash Advance “MCA” may appear to offer a lifeline, but they are in many ways predatory financial products that exploit vulnerable businesses.
The harsh reality is that Merchant Cash Advance “MCA” are not the solution they seem to be, and in fact, they are a dangerous trap for businesses struggling to survive.
In this article, let’s look at why Merchant Cash Advance “MCA” are harmful, how they exploit small businesses and most importantly, how to safely and quickly get away from them.
(continue reading below…)
WHAT IS THE BEST AND SAFEST WAY FOR YOUR BUSINESS TO DEAL WITH MERCHANT CASH ADVANCE “MCA” PAYMENTS WHEN YOU CAN’T KEEP UP?
It is NOT by stopping ACH payments.
It is NOT by taking on another “MCA” or additional business loan.
It is NOT a “reverse consolidation” (MCA-on-top-of-a-MCA)
It is NOT by entering into a debt settlement program.
Find out the BEST strategies to get your Business back to where it was
Find out how to SAFELY stop using Merchant Cash Advance “MCA” to fund your business
Get away from MCAs!
Setup a brief meeting below to speak with a business finance expert, and we will show you how!
[WHAT IS A “MCA” SUPPOSE TO BE?]
A Merchant Cash Advance “MCA” is a form of alternative financing that allows businesses to receive an upfront lump sum of capital in exchange for a portion of their future revenue deposits.
The lender provides a business with a cash advance based on their projected sales, and the business repays the advance through daily or weekly deductions from their revenue.
The key characteristic of an MCA is that it is not technically a loan.
Rather than being based on interest rates, the cost of the business capital is based on a "factor rate," which can often be between 1.3x and 1.7x times the amount borrowed paid over a period of time such as 9-months (sometimes more or less).
For example, if a business borrows $100,000, they might have to repay between $130,000 and $170,000 depending on the factor rate. These repayments are estimated in the “MCA” contract.
While this may sound like an easy way to get quick funding, the reality is far more complex and dangerous.
[THE DECEPTIVE NATURE OF MERCHANT CASH ADVANCE “MCA”]
At first glance, a Merchant Cash Advance “MCA” can appear to be a convenient and straightforward option for businesses in need of quick capital.
The process is “quick and simple”, and approval times are much faster than those of traditional lenders.
[HOW MERCHANT CASH ADVANCE “MCA” PREY ON SMALL BUSINESSES]
However, the ease of access to funds is a major part of the problem.
The appeal of instant gratification often clouds the reality that many businesses which turn to Merchant Cash Advance “MCA” are in a vulnerable position.
These businesses are typically facing cash flow shortages, seasonal fluctuations, or other financial difficulties.
The lenders know this and prey on these vulnerabilities.
(continue reading below…)
WHAT IS THE BEST AND SAFEST WAY FOR YOUR BUSINESS TO DEAL WITH MERCHANT CASH ADVANCE “MCA” PAYMENTS WHEN YOU CAN’T KEEP UP?
Setup a brief meeting below to speak with a business finance expert, and we will show you how!
[MERCHANT CASH ADVANCE “MCA” ARE MISLEADING]
Merchant Cash Advance “MCA” often lack transparency, leaving business owners unaware of the true cost of borrowing.
The factor rate which is the core of a Merchant Cash Advance “MCA”, is often misleading.
Business owners may be under the false impression that a Merchant Cash Advance “MCA” is like a loan with a fixed interest rate.
However, the factor rate does not work like an interest rate in a traditional loan. Instead of having a clear, fixed amount of interest, the business is essentially paying a multiple of the original loan amount—often with little understanding of how much they will ultimately owe.
Furthermore, Merchant Cash Advance “MCA” is frequently sold with vague or deceptive language that hides the full cost of borrowing. (shady fast-talking brokers slinging Merchant Cash Advance “MCA” say anything they need to so they can get your business “funded” so they can get their 8% - 12% commissions paid to them from the “MCA” company)
A business that experiences a temporary dip in sales may end up with an even larger repayment obligation, increasing the likelihood of default and financial distress.
[THE CRUSHING MERCHANT CASH ADVANCE “MCA” BUSINESS FINANCIAL BURDEN]
The most significant issue with Merchant Cash Advance “MCA” is the cost.
While they might seem like an easy solution to a temporary cash flow problem, they quickly become (within 3 to 4-months or so) a big financial burden to the business.
Due to the high factor rates and unpredictable repayment schedules, businesses can find themselves trapped in a cycle of debt.
[CAN’T KEEP UP WITH THE CONSTANT DRAIN ON BUSINESS CASH FLOW?]
This constant drain on business cash flow can be crippling for businesses, particularly those in industries with fluctuating sales or seasonal variations.
In many cases, business owners find themselves unable to keep up with these payments and may be forced to take out additional Merchant Cash Advance “MCA” to cover existing debts.
(continue reading below…)
[THE VICIOUS MERCHANT CASH ADVANCE “MCA” CYCLE]
This creates a vicious cycle where businesses are constantly borrowing more money to cover existing obligations, ultimately leading to further need for debt and MCA renewals.
The business may begin to operate under the illusion that they are "getting by," but in reality, they are sinking deeper into financial despair.
[PREDATORY PRACTICES OF MERCHANT CASH ADVANCE “MCA” LENDERS]
One of the most troubling aspects of Merchant Cash Advance “MCA” is the predatory nature of the lenders and their brokers who offer them.
Many Merchant Cash Advance “MCA” lenders and their brokers are fully aware that the businesses they lend to are in financial distress, and they capitalize on this vulnerability.
Let me say that again:
“Many Merchant Cash Advance MCA lenders are fully aware that the businesses they lend to are in financial distress, and they capitalize on this vulnerability.”
[MERCHANT CASH ADVANCE “MCA” USE AGGRESSIVE MARKETING]
These lenders often use aggressive marketing tactics to convince small business owners to take a Merchant Cash Advance MCA, offering promises of quick cash with no credit checks or collateral required. “MCA” brokers are extensions of the Merchant Cash Advance “MCA” company.
You think you are the “MCA” broker’s “client” but you are not.
They are working for the Merchant Cash Advance “MCA” company!
While this may sound appealing to a business owner struggling with cash flow, it sets the stage for an EXPLOSIVE relationship.
[NEARLY IMPOSSIBLE TO PAY BACK]
In most cases, the true cost of the Merchant Cash Advance “MCA” can be far higher than traditional loans, making it nearly impossible for small business owners to repay the debt without crippling their finances further.
Additionally, many MCA lenders include hidden fees in their contracts, such as prepayment penalties, which discourage businesses from paying off their advances early.
This is done to ensure that the lender continues to make money off the business for as long as possible, even if the business is struggling to stay afloat.
[IMPACT ON BUSINESS OWNERS]
The consequences of taking out a Merchant Cash Advance “MCA” can extend far beyond just financial strain. The emotional toll on business owners can be devastating.
Many business owners pour their heart and soul into their companies, and the weight of financial hardship can take a huge emotional and psychological toll.
Constantly worrying about making the next payment, struggling to maintain business cash flow, and dealing with mounting business debt can lead to anxiety, stress, and even depression.
For many business owners, the experience of dealing with Merchant Cash Advance “MCA” can feel like a never-ending cycle of despair.
As their financial problems mount, their mental health may begin to deteriorate, leading to a loss of confidence, burnout, and a diminished ability to make sound decisions for their business.
This level of financial jeopardy can be emotionally crushing, especially when the business owner has already invested so much into their venture.
(continue reading below…)
WHAT IS THE BEST AND SAFEST WAY FOR YOUR BUSINESS TO DEAL WITH MERCHANT CASH ADVANCE “MCA” PAYMENTS WHEN YOU CAN’T KEEP UP?
It is NOT by stopping ACH payments.
It is NOT by taking on another “MCA” or additional business loan.
It is NOT a “reverse consolidation” (MCA-on-top-of-a-MCA)
It is NOT by entering into a debt settlement program.
Find out the BEST strategies to get your Business back to where it was
Find out how to SAFELY stop using Merchant Cash Advance “MCA” to fund your business
Get away from MCAs!
Setup a brief meeting below to speak with a business finance expert, and we will show you how!
[WHY MERCHANT CASH ADVANCE “MCA” NEED TO BE STOPPED]
Merchant Cash Advance “MCA” are dangerous financial products that prey on vulnerable small and medium-sized businesses.
While they may offer quick access to capital, the high costs and predatory nature of Merchant Cash Advance “MCA” often lead to financial devastation for business owners.
To truly support small businesses, alternative financing options should be transparent, fairly priced, and designed to help businesses recover and grow, rather than sink deeper into debt.
We are here to advise you through the best steps to get away from Merchant Cash Advance “MCA”.
BERNARSKY PARTNERS is a business finance and strategy firm helping small and medium-sized businesses properly navigate financial and operational challenges, experience growth or re-growth, and meet their overall business goals.
BERNARSKY PARTNERS
Business Finance & Strategy Advisors
Refinance. Restructure. Reorganize.
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