My Merchant Cash Advance Loan is Killing My Business


Dear Steve,

I own a small business automotive business that has been affected by the coronavirus.

We are well established, and I believe things will get better. My financial problem is a mca loan.

I have a $3,000/ month payment.

This loan, along with all other fixed expenses, exceeds the net income and killing cash flow.

The loan is with fox financial for 17000 and payback of 24000. The daily payment is $139/day.

The company will reduce the payment for a week or two, which is not enough relief. I know not

To give my payment to these scam companies that will work it out with fox. What will happen if I

Stop the ACH debit with my bank. Will they sue or possibly then renegotiate a settlement with me

With better terms. Lastly, do you have any recommendations of a legitimate company that can help?

Thank you,



Dear Steve,

I asked my friend Charles Evans at Corporate Turnaround for some advice on this situation. They deal with MCA issues all the time.

Here is what he said.


This exact style of loan or merchant cash advance is prevalent. It has also become common for these lenders to offer a short-term reduction in payments, but the reduction is never enough to solve it. I wouldn’t suggest just stopping payments without asking these questions:

  1. Did you sign a COJ [confession of judgment]?
  2. Did the lender file a UCC?
  3. Can the lender attach your credit card processing?

Stopping payment is your leverage, but they can act fast, even within 24 hours, and take money right out of your bank account and related accounts in the same bank.

They can also attach credit card processing and possibly go after other receivables, so you need a plan.

In developing a plan, you’ll need to think like the creditor because though the loan may be super expensive, you signed the papers and accepted the funds.

See also  Facing Business Debt Collection and Looking for Solutions?

So a good plan has to satisfy them too.

A plan is based upon these types of questions:

  1. How much can you actually afford per day?
  2. How much have you sent already of the $24,000?
  3. What hardship are you experiencing [ Covid-19 /People not driving as much etc.]
  4. What final amount might they accept?
  5. What might you accept?

You’ll need to get the payback to around 40 dollars per day or less for it to be affordable, from my experience. Then divide that into the dollar amount that makes sense to you and get the agreement in writing, understanding that missing a few payments won’t void the deal. The final settlement amount is a fixed dollar amount with no interest.

This is easier said than done. Remember, if you negotiate, start low.

But, they typically won’t agree to terms like this or even negotiate while you are paying them, and when you stop, they will probably take immediate action.

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

Plus, there are likely many other provisions in the agreement to attach thousands in fines and legal fees if you block payments.

This is why it’d be best to seek professional help in this situation. Good help is available.

GetOutofDebt has posted on recognizing scams.

  1. The Ultimate Consumer Guide to Checking Out a Debt Relief Company Before You Sign On the Line
  2. 10 Must Do Steps to Find the Best Counseling or Settlement Company for You
  3. How to Check Out a Business or Company to Avoid Getting Scammed or Ripped Off

We posted a page specific to business debt scams too: How to Spot a Business Debt Scam

The main thing to avoid is paying up-front fees or retainers and finding a performance-based company with an excellent reputation.

Charles Evans

Charles Evans is Director of Business Development for Corporate Turnaround [CT] in Paramus, N.J. His responsibilities include strategic alliances, Internet marketing, B to B marketing, and developing press coverage. While at CT, Charles has trained over one thousand business counselors with SCORE and the ASBDC in business debt management. He is Board Chair of the Bergen County Small Business Development Center and served as Executive Marketing Chair for the Bergen Workforce Investment Board [Bergen WIB]. His prior experiences include commercial printing sales, securities sales, and hiring an Internet monitoring firm’s salesforce. Charles has also assisted several new ventures in developing a successful business plan and gaining funding. Linkedin profile

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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