When MCA pressures rise, business owners can quickly get trapped in a corner under crushing financial and legal burdens. Several options for relief exist.

  • Communicate with the MCA

­Often the best solution is a direct, arm’s length resolution with the MCA provider. If in default or likely to default, consider contacting the MCA to request repayment modifications or hardship relief. Many MCAs would rather receive something than nothing and may cooperate on a solution.

  • Explore alternative financing

­Many SMBs are unaware of the various alternative funding options available to them – term loans, unsecured lines of credit, asset-based lending, invoice factoring, bridge loans, et al – all solid alternatives to traditional bank loans. Most have better terms and are less risky than MCAs. If the business is experiencing financial distress, consider retaining a qualified capital advisory firm to present the business properly to the right financing sources.

  • Consider debt consolidation

­Third-party debt relief specialists can help to reconcile MCAs by negotiating with the MCA providers on the company’s behalf to help protect a principal’s business and personal assets and effectuate a formal workout plan.

  • Hire an MCA attorney

­Consider engaging a law firm with experience dealing with MCAs and any prospective or active lawsuits. Qualified legal representation often costs a business owner far less in the long run and can save a business from an unnecessary, embroiled legal battle.

  • File for bankruptcy

-­Though usually a last or near-last resort, the filing of a bankruptcy can be the best avenue to save one’s business versus losing it. The type of bankruptcy depends on the company’s ownership structure, its assets, and overall viability and long-term plan.

The MCA industry continues to revolutionize the way businesses access capital. MCAs may be expensive, risky money, but in the end it’s money. For business owners whose backs are against the wall and know no other option, the elevated risk becomes quickly acceptable. Some will view MCAs as predatory lenders. Others will view them as corporate saviors. Lifeline or debt trap? Both scenarios exist, and at extremes.