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.
There's a reason that responsible lenders want you to show them that you can handle money before they are willing to lend it to you, without all the fees and high interest rates they use to mitigate risk.
Predatory lending is any lending practice that imposes unfair and abusive loan terms on borrowers, including:
Truth 1: You can run your business without debt. It takes patience and the guts to do things differently.
Most business owners wonder, How can I fund my business without borrowing money?2
Expand your business gradually and move at the speed of cash to lower your financial risk and minimize the impact from the mistakes you’ll make as you grow and learn.
Moving at the speed of cash has another advantage too: It helps you pause and think.
Using cash assets from your account activates the pain center in your brain so you’re more likely to question whether you really need to purchase that next item and all the company debt that comes with it….(continued)
Here are a few reasons you may not want to take on more business debt:
Repayment: When you take on business debt, it has to be repaid in full with interest or financing charges…
Running a small business can take a lot of time and money, which is why many entrepreneurs leverage debt in the beginning.
Debt can be a useful tool to start your business, but make sure your debt is working for you, not against you.
Both profitability (P&L) and its cash flow (income statement) are important to a business.
When Business Cash Flow is strained, it can impact and damage businesses.
2. Complete Application and Upload Supporting Documents (5 to 10-minutes or less)
3. Receive Determination (1 to 2-business days)
RESTRUCTURE
Business Debt + Merchant Cash Advance (MCA)
1. Submit your Restructuring Inquiry
2. Speak with one of our Restructuring experts
3. Engage with our Business Debt Restructuring team to modify your business debt
6 Easy Steps to Refinance & Consolidate Business Debt + Merchant Cash Advance (MCA) Loans:
1. Submit a Quick Qualifier (1 minute or less)
2. Complete Application and Upload Supporting Documents (5 to 10-minutes or less)
3. Receive Determination (1 to 2-business days)
4. Create Credit Package with our underwriting team for presentation to our inventors
5. OPTION 1: Short-term Refinance for “MCA Relief” (3 to 5-business days to close; 12 to 18-
month term); [18% to 28% APR or 1.18 to 1.28x factor over 12 to 18-months]
6. OPTION 2: Long-term Full Refinance of all Business Debt + MCAs (3 to 4-weeks to close; 24 to
60-month term loan with one monthly payment); [14% to 19% APR + closing & legal fees on a 24 to 60-month term]
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.
Business Finance & Strategy Advisors
Refinance. Restructure. Reorganize.
Help with Business Debt, Loans and Merchant Cash Advance (MCA)
