MCAs and how they can lead to a cycle of high-interest debt where the only way to repay your loan is to take out a new one
- “Interest rates” up to over 100% and considerable financing charges, with minimal transparency about those terms before you sign
- There’s no benefit to paying your debt off early; the “interest rate” on MCAs is flat and consistent, so whether you pay the money back in 2 days or 30 days, you’re still stuck with the same, massive rate
- Could harm your relationship with the GC, because the MCA company will call and hound them if you are late on the high payments they’re seeking
- Can hurt your personal credit, with consequences extending beyond your business and into your personal finances
- Locks you into a cycle of debt that’s extremely hard to get out of, in which the only way to pay your first MCA is to take out a new one with equally poor terms
- If you’re looking to get other forms of capital, reputable lenders and bankers may be less likely to work with you; if you owe too much to an MCA, it may prohibit you from receiving new sources of capital at all
- Careless disregard for your team and company
Terms Predatory Lenders Use to Avoid Saying “MCA”
MCAs obviously won’t lead with the truth or just out themselves as high-risk for your business. Why would they? That means they’re using new deceptive language to draw you in – a wolf in sheep’s clothing.
The Short List of Terms You’ll See Some MCA Lenders Using:
- Alternative funding
- Direct funding
- “An investment” or ”We invest in companies”
- Line of credit
- Bridge capital
- Growth capital
- Acquisition financing
- Vendor payable extension
- Undervalued equity
- Funding 24 hours
- Pledging future receivables
Bottom Line – look for better options and read the fine print before you sign the agreement with an MCA or any lender.
If you are over stacked-need help-want to get out from under the nightmare…give us a call or fill out our online application
Our Restructuring Program:
Preserves Credit-100% Payback means good standing – NOT a DEBT SERVICE
✓ Instant Relief-Payments cut in 3 days
✓ Multiple Stacks into one weekly or monthly payment
✓ Lender Friendly-We work WITH them, not against them
✓No Prepayment penalty
✓Defaults- Delinquencies- Data Merch-ok
✓ Future Funding-Keeps you eligible for future capital
✓Reduce Outflows by 30 -75%
