Every small business owner knows the feeling.
It's that gut-wrenching moment when you look at your bank balance and realize it's lower than you'd like.
The invoices are piling up, and the money isn't coming in fast enough.
This isn't just a hypothetical scenario; it's a common, and often stressful, reality for many entrepreneurs.
A business, no matter how profitable it is on paper, can't survive without a healthy cash flow. It's the lifeblood of your operation, covering everything from payroll to purchasing inventory.
When it's tight, it can feel like you're in a financial pressure cooker. But here’s the thing: you're not alone, and there are proactive steps you can take.
One of the most powerful, yet often overlooked, strategies is to open a dialogue with your creditors.
This article will walk you through why, how, and when you should talk to the people you owe money to, transforming a potential crisis into a manageable situation.
As a small business owner, you're the engine of your enterprise. You're the visionary, the strategist, the marketer, and often, the accountant. You understand that profitability is the lifeblood of your company. You watch your sales numbers, scrutinize your expenses, and tirelessly work to increase your margins. But what if a hidden threat is silently gnawing at your profits, a threat you might not even realize exists? This threat is bad business financing. It's the high-interest loan you took out in a moment of desperation, the predatory line of credit that seemed too good to be true, the convoluted equipment lease that's costing you more than the asset itself. These seemingly innocuous financial decisions can act like a slow-moving poison, siphoning off your hard-earned revenue and leaving you with less to invest in growth, less to pay your team, and ultimately, less to put in your own pocket.
The allure of quick cash can be strong. A new opportunity arises, a critical piece of equipment breaks down, or a sudden cash flow crunch threatens to derail your operations. In these moments, the first offer that comes your way, regardless of its terms, can look like a lifeline. But this is where the danger lies. A bad financing deal doesn't just cost you money in the short term; it creates a long-term drain on your resources. It's a weight that gets heavier with each passing month, forcing you to constantly run faster just to stay in the same place. This article will be your guide to understanding the various ways bad business financing can eat your profits, and more importantly, how you can avoid these pitfalls and secure a financial foundation that truly supports your business's growth. We will delve into the different types of bad financing, the warning signs to look out for, and the strategic decisions you can make to ensure your financing works for you, not against you.
Your business is more than just a company; it's a testament to your relentless effort and unwavering vision.
You've fought through countless challenges, from market downturns to unforeseen emergencies.
But there’s a new, more insidious threat lurking in the shadows of the financial world—one that preys on your moments of vulnerability.
This isn't a simple risk; it’s a sophisticated attack.
When cash flow tightens or you face an unexpected setback, predatory lenders see it as an open invitation to seize your hard-earned assets and ultimately dismantle your dream.
Their methods are subtle, their promises are slick, and their contracts are designed to be a financial trap.
Understanding this threat is the first step to defending yourself and securing your business's future.
The time for passive learning is over. This is a call to arms for every business owner.
Short-term Business debt isn't a long-term solution; it's a financial chokehold.
Think about your daily or weekly payments.
They don’t just happen; they actively steal from your business's future.
You’re constantly scrambling, watching every dollar you earn get siphoned off the moment it hits your account.
And what about the interest?
That small percentage on a merchant cash advance or line of credit is a financial mirage. When you calculate the true Annual Percentage Rate (APR), you'll see a number so high it will make your head spin.
This is money that could have been used for a new marketing campaign, a much-needed piece of equipment, or even an emergency fund.
Instead, it’s gone. You're not just paying for money; you’re paying a premium for your own financial instability. This constant stress isn’t just bad for your business; it's eating away at your health, your focus, and your ability to lead. You need to act, and you need to act now.
This guide provides education and awareness about the common practices in the high-cost and short-term business lending market.
It sheds light on complex terms like "factor rates" that can obscure very high Annual Percentage Rates (APRs) and details the risks associated with certain contractual clauses, such as Confessions of Judgment and Uniform Commercial Code (UCC) blanket liens.
It also explains the potential conflicts of interest with some funding brokers, who may be motivated by high commissions to recommend expensive debt over more affordable options like SBA loans and other long-term lenders in the private business credit marketplace.
The consequences of taking on high-cost debt can be severe, leading to cash flow problems, operational strain, and intense stress for business owners.
These challenges are often compounded by a regulatory environment that offers fewer protections for business loans than for consumer loans.
This guide is a resource for building a stronger, more transparent financial future.
For business owners, it offers a toolkit for financial literacy and due diligence.
Through education and constructive solutions, we can empower small businesses to secure the reasonable and helpful capital they need to thrive.
Benefits of Refinancing & Consolidating Business Debt + Merchant Cash Advance (MCA) loans include:
One monthly payment
Fixed interest rate
One lender
Flexible terms
Working capital
Debt Refinancing consolidation is the process of replacing multiple loans with one single loan. This reduces the number of creditors you are paying by consolidating your debts into one payment through a single lender.
1-Minute or Less Qualification for Business Debt & Merchant Cash Advance (MCA) Refinancing
Payoff all Business Debt & Merchant Cash Advance MCA debt to a term loan
One monthly payment on a 24 to 60-month term loan
All business debt paid off to a $0 balance at closing
Interest rates 14% to 18% (plus closing costs, PIK and legal fees)
Short-term Refinance (12 to 18-month term loan) can close in 3 to 5-business days
Long-term Refinance (24 to 60-month term loan) can close in 3 to 4-weeks
Working capital is available at closing in Refinance consolidation transactions
A new, on-going relationship with a Capital Partner (not just a one-time transaction)
Interest-only for 6 to 9-months after closing is available
Reconcile your Merchant Cash Advance MCA contract and payments
HAVE YOU RECONCILED YOUR PAST AND FUTURE MCA CONTRACT PAYMENTS?
Over payments on your MCA contract(s) may be present right now.
Your business may be owed over payment credits or refunds.
YOU MAY BE OWED MONEY FROM MERCHANT CASH ADVANCE MCA COMPANIES!
STOP TAKING MERCHANT CASH ADVANCE (MCA)!
MCA-taking allows MCA companies to steal your top-line sales.
When you take an MCA, the “factor” rate that you pay is directly related to the amount of top line sales that you are giving away.
$100,000 MCA at 1.38x “factor rate” is the SAME AS IMMEDIATELY GIVING AWAY $38,000.
That is why you don’t have enough cash flow.
That is why you cannot afford the daily or weekly payments.
DEAL TABLE: $1,370,000 IN MCA LOANS PAID OFF TO A SHORT-TERM (18-MONTH) “MCA RELIEF” REFINANCE + $750,000 IN WORKING CAPITAL
SaaS and I.T. Cloud Services Company with Merchant Cash Advance MCA loans and other high-interest, short-term debt totaling ~$1,370,000.
The Company was paying ~$197,072 Total in monthly payments to MCA companies and short-term debt providers.
At closing, all MCAs were paid off for a discounted amount and zero-balance letters (ZBLs) were issued to the Company from the MCA loan companies.
The Company’s new TOTAL monthly payment is now $79,500 (payment reduction of over 60%, down from $197,072), and company was given $750,000 of working capital at closing.
It’s is extremely important to understand the true Cost of Capital when you are considering taking on any type of business debt financing.
This is the #1 reason that MCA loans destroy good, profitable businesses since MCA loan’s Cost of Capital is extremely high compared to all other business debt financing options.
DEAL TABLE: $500,000 IN MCA LOANS PAID OFF TO A SHORT-TERM (18-MONTH) MCA RELIEF REFINANCE + $100,000 IN WORKING CAPITAL
Real Estate Management Company with Merchant Cash Advance MCA loans and other high-interest, short-term debt totaling ~$500,000.
The Company was paying ~$134,972 total monthly payments to MCA companies and short-term debt providers.
At closing, all MCAs were paid off for a discounted amount and zero-balance letters (ZBLs) were issued to the Company from the MCA loan companies.
The Company’s new total monthly payment is now $64,000 (payment reduction of over 52%, down from $134,972), and company was given $100,000 of working capital at closing.
DEAL TABLE: $900,000 IN MCA LOANS PAID OFF TO A LONG-TERM LOAN + $500,000 IN WORKING CAPITAL
General Contractor and Builder with Merchant Cash Advance MCA loans and other high-interest, short-term debt totaling $900,000.
The Company was paying $123,842 total monthly payments to MCA companies and short-term debt providers.
At closing, all MCAs were paid off for a discounted amount and zero-balance letters (ZBLs) were issued to the Company from the MCA loan companies.
The Company’s new total monthly payment is now $48,612 (payment reduction of over 60%, down from $123,842), and they were given $500,000 of working capital at closing.
Merchant Cash Advance MCA refinance and consolidation pays off all your MCAs to a zero balance and stretched your business debt over a longer period, therefore lowering your total monthly debt payments by 50% to 90%+.
We always prefer to hear more details of your business financing situation and goals, now and in the future, prior to making specific recommendations. Please book a consultation call here —>
Kanjorski Partners LLC’s consultants and advisors are equipped to handle most any MCA stressed and/or distressed situations.
Generally we have two types of MCA refinance programs and processes:
1) Short-term MCA Relief (Payoff and Consolidation to a Longer Term)
3 to 5-business-day process (app to closing) for MCA payment relief and working capital
MCAs paid off to a zero balance at closing and UCC removed
Cost of capital ranges from 18% to 28% (pending underwriting risk assessment)
Weekly or Bi-weekly payment options (determined in underwriting)
12 to 18-month term (pending underwriting)
Reduce your total monthly debt service payments by 50% to 60%
2) Long-term Full Refinance (Payoff and Refinance all business debt to a Longer Term)
Full refinance and payoff of all business debt (will leave a bank, SBA or AR factoring relationship in place)
3 to 4-week process (app to closing) for a full refinance (recap) of all business debt
Working capital provided at closing (determined in underwriting)
One monthly payment
2 to 3-year term (and in some cases and industries, 5 to 7-year+ or longer)
SBIC, private equity and investment banking is also available for special situations
MCAs paid off to a zero balance at closing and UCC removed
Cost of capital ranges from 12% to 18% (pending underwriting)
Monthly payment is principal and interest
Interest only (IO) “relief” period for 6 to 9-months after closing
Reduce your total monthly debt service payments by 60% to 90%
SHORT-TERM MCA REFINANCE —> 12 to 18-month term —> weekly and/or bi-weekly payments
—> 3-5 days application to closing —> APPLY HERE
LONG-TERM MCA REFINANCE —> 24 to 36-month term —> monthly payments
—> 2 to 3-weeks application to closing —> APPLY HERE
“…Defaulting (missing or stopping payments) on a Merchant Cash Advance (MCA) can potentially drain your business’ bank account, trigger aggressive collection action under Uniform Commercial Code (UCC) and civil litigation. Default under the provisions of a Merchant Cash Advance (MCA) agreement can put your business and you personally in a difficult position.
If you cannot continue to afford your Merchant Cash Advance (MCA) payments,
there are solutions for you and your business!….”
“….Merchant Cash Advance (MCA) is a trap for small businesses.
Easy to get into and hard to get out of Merchant Cash Advances (MCAs) should be the last resort for small business owners that need funding quickly or who may not qualify for a traditional bank loan.
Before you consider taking a Merchant Cash Advance (MCA), please seek other alternative (non-bank) financing as there are much better options out there for your business…..”
1) MERCHANT CASH ADVANCE (MCA) REFINANCE:
Refinance and payoff your Merchant Cash Advance with a new term loan or line of credit
https://www.kanjorskipartners.com/merchant-cash-advance-refinancing-consolidation
2) MERCHANT CASH ADVANCE (MCA) RESTRUCTURE:
Re-negotiate your Merchant Cash Advance agreement(s) to longer terms with lower payments that your business can manage and afford to pay back on a new weekly, bi-weekly or monthly payment schedule
https://www.kanjorskipartners.com/merchant-cash-advance-and-business-debt-restructuring-services
Continue to full post….
Read our post to hear about all of your options and to setup a
FREE consultation call for Merchant Cash Advance (MCA) Solutions…..
Merchant Cash Advance (MCA) Debt Refinance-
https://www.kanjorskipartners.com/merchant-cash-advance-refinancing-consolidation
Merchant Cash Advance (MCA) Debt Restructuring-
https://www.kanjorskipartners.com/merchant-cash-advance-and-business-debt-restructuring-services
Merchant Cash Advance (MCA) Help & Information for Business Owners-
https://www.kanjorskipartners.com/merchant-cash-advance-information-and-resources-refinancing-restructuring-stop-merchant-cash-advance-lower-merchant-cash-advance-payments
“…Merchant Cash Advance (MCA) has many disadvantages that you should be aware of before you enter into a MCA receivables purchase agreement. Weigh these disadvantages against the potential benefits.
1. MERCHANT CASH ADVANCE (MCA) IS AN EXTREMELY EXPENSIVE FORM OF FINANCING
2. MERCHANT CASH ADVANCE (MCA) IS A SHORT-TERM FINANCING OPTION, NOT A SOLUTION
3. MERCHANT CASH ADVANCES (MCAs) DO NOT SOLVE CASH FLOW PROBLEMS
4. SELLING FUTURE SALES IN A MERCHANT CASH ADVANCE (MCA) AGREEMENT IS DANGEROUS…”
Read our full post about the “Disadvantages of Merchant Cash Advance (MCA)”
“…When your business financing broker is presented with an “Approval” from the Merchant Cash Advance (MCA) company, your broker chooses from a list or tier of “Offers” at each Merchant Cash Advance (MCA) company. This list of offer options contains variable commission rates and payback terms and cost to the borrower. (Ex.- $100,000 in “funding” at a 1.35x factor rate or $135,000 payback). Your “trusted, friendly broker” adds from 0.10x to 0.15x to the offer and presents it to you as: $100,000 in “funding” at a 1.50x factor rate of $150,000 payback…”
“…On a $100,000 Merchant Cash Advance (MCA), a broker who sold the advance to their client (you) receives between 10% and 15% of the total amount funded. So your broker receives $10,000 to $15,000 (10% to 15% of the total “funding”) the day after you get “funded”…
Yes. That is not a typing or mathematical mistake on our end. We assure you of this. This is the reality of how grossly over-compensated your broker is for selling you a high-cost and very short-term business financing option…”
FREE Consultation with our Merchant Cash Advance (MCA) Refinancing & Restructuring experts.
Fill out the inquiry form below and we will get you started on MCA refunds STARTING TODAY!
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