November 30, 2023
Are you looking for a Payday Loan otherwise known as a Merchant Cash Advance (MCA)?
What is an MCA?
An MCA, also known as a payday loan, offers a convenient solution for obtaining a lump sum of money by selling your future bills to a finance company. It is important to note that an MCA is not classified as a traditional loan. Unlike regulated loans, MCA companies are not obligated to disclose all the intricate details to borrowers.
Obtaining an MCA could potentially jeopardize the terms of your factoring agreement and pose significant risks to your income.
MCA's may seem like a convenient and effortless method to acquire funds, however:
- These loans come with exorbitant interest rates, often ranging from 30-90%, and sometimes even surpassing 100% after factoring in additional fees.
- Additional charges may accumulate rapidly
- Typically, MCA finance companies demand substantial daily payments that are directly withdrawn from your bank account.
- There may be steep penalties for failing to meet the MCA requirements without any feasible solutions.
- They may ask you to provide a list of your customers, which they will then use to inform your customers of any defaults and require them to make payments directly to the MCA finance company.
- May contain contracts with misleading language that can be difficult to understand.
- There may be a confession of judgment (COJ) clause that grants the MCA finance company the authority to pursue not just your business assets, but also your personal assets in the event of a default.
If you're considering an MCA and want to avoid costly mistakes or the risk of going out of business let our dedicated sales and legal team guide you through your decision-making process. Feel free to reach out to us for assistance. We may have the solutions you need to help streamline your cash flow and manage your accounts receivables.