April 2, 2025
What Happens If I Just Stop Paying My MCA Loans?
If you stop paying your MCA loans, the funding companies may start the default process which means they will implement collection efforts and most likely legal actions.
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If you are currently paying multiple cash advances, you undoubtedly know how unsustainable this debt servicing can be. Paying many advances back will put pressure on cash flow and eventually these debt payments can get too overwhelming.
When our underwriting team reviews a reverse consolidation request, our number one priority is to attempt to achieve a cash flow savings for the applicant. If we can lower the weekly debt servicing load, this means that the business can operate less burdened by large and fast debt payments. A business that goes through a reverse consolidation has a much better chance of successfully paying off all cash advances.
The best way of ‘Getting Out’ of MCAs is to go through the repayment process. If there are multiple MCAs being serviced, this path will be very challenging. This is why our clients choose to enact a reverse consolidation. This lowers the debt servicing and the business is able to keep more money in the business, to cover regular business expenses.
Here is an example of a Reverse Consolidation where a business has over $500,000 in MCA Debt.
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This business generated $415,000 per month in Gross Sales. With a monthly outlay of $100,944 in debt payments, 24% of the monthly revenue was being used to satisfy the MCA payments.
We were able to approve the business for a Reverse Consolidation. Here is the breakdown:
Weekly Initial Disbursements of $25,236 to cover 5 MCA payments.
The new weekly payment was set at $15,250.
This means that the Total weekly cash flow savings was $10,000 and total savings monthly of $40,000.
It's FREE to apply and see if you qualify. Apply or Connect with a Specialist.
If you stop paying your MCA loans, the funding companies may start the default process which means they will implement collection efforts and most likely legal actions.
If you have been paying more than one cash advance at a time, this MCA debt savings calculator will give you some sobering insight into what percent of your business’ available ‘on hand’ cash is being used to pay down expensive MCA debt.
In today’s highly competitive business landscape, managing debt effectively is essential for maintaining financial health. Our Reverse Consolidation program offers an innovative and flexible solution, empowering merchants to consolidate and manage their business debt more efficiently.
The inflationary environment that small business owners are encountering right now, means that their businesses are spending more for everything and this has a direct effect on credit approvals. Nearly half of small businesses (45%) identified rising costs as the biggest challenge facing them today. Business owner personal credit usage is compounding the ever increasing ‘credit crunch’ for small businesses.
If you are a business owner that is currently paying 1 or more Merchant Cash Advances, odds are you would be interested in lowering your payment sizes. Merchant Cash Advances are used as a quick fix for business working capital needs, but borrowing more than one simultaneously can mean a significant drain on operational cash. The quick payback of MCA loans mean that the business will need to commit to weekly or daily repayments, often a term of less than 12 months.
