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Trying to run a small business and dealing with the stress of keeping the business alive when things are not looking like they are going to workout is a nightmare. I lived through that many decades ago and it was not fun at all.
There are few things much worse than facing calls and contacts from a business debt collection agency while trying to claw your way to stay in business with every day that goes by.
Over the years, I’ve seen it all, the corner pizza joint closing up and ten people lose their job, the business that fails and because the owner had personally guaranteed the business loan debt and the home finances are mangled or the small business that has a debt problem because they fell for a Merchant Cash Advance loan or MCA financing sales pitch.
Merchant cash advance companies hover around and look for companies without experience in dealing with problem debt. You might be great at operating a catering company and can make a mean wedding buffet. Still, almost no company is ready to deal with business debt settlement to stay in business.
When a small business is trying to make it through the week and is intimidated by a debt collection company contacting them or a vendor threatening to cut them off, emotion will trump logic.
It is natural for the person in charge (you maybe?) to flat out panic and jump at an offer from a merchant cash advance company.
Why the Merchant Cash Advance Company Traps You
The honest and obvious answer is because they can.
The merchant cash advance business is always on the lookout for a small business with big debts to get their foot in the door.
The sales pitch is innocent enough. They eagerly want to lend you money up to 350% and put the money in your bank account quickly. It seems like a blessing before it turns into a curse.
It all starts innocently enough. A small business owner does a search for an easy money business lender.
Ads like these might appear.
What often starts to sink the small business are the daily payments the merchant cash advance loan company withdraws from the business bank account.
Business Debts Can be Dealt With
Let’s take the example of an actual small caterer that tried to survive by taking out not just one merchant cash advance loan but eight from a merchant cash advance bad credit lender.
Johnny reached out for help when things felt like they were sliding under the waves and the company was drowning.
With nearly $500,000 in business cash advance loans, the monthly payments were $80,000 a month. Yet realistically, the catering company could only afford a maximum of $10,000 a month.
Without serious and experienced intervention by a business debt negotiator, there is no doubt that the company was going to close its doors, and the small business owner was going to be on the hook for a whole lot of residual debt.
It is too early to tell if the catering company is ultimately going to survive this financial dilemma. Primarily because they did not reach out for expert assistance as soon as possible,
One business cash advance loan can lead to another, and another, and another. It is mentally easier to ask for more loans than asking for help when you feel embarrassed or ashamed of your situation. That’s just human nature.
Johnny is not the catering company owner’s real name, but these words are after they took the big step of seeking assistance. The owner said, “the process isn’t over. The light at the end of the tunnel has become much brighter.” This sums it up nicely, “I only have one regret, that I didn’t call them up sooner.”
Is There a Magic Solution to Business Debt Problems?
There is no magic solution to any debt problem. However, there are educated, informed, and experienced interventions that can alter the situation and lead to a different outcome.
If you can find a business debt advisor that knows how to approach the merchant cash advance lender and knows what they will actually do to resolve the situation, you are a long way to dealing with the issue.
In my life, I’ve seen small business debt problems be solved with easy solutions like working with vendors, more involved solutions like negotiating with the merchant cash advance business, or waiting too long and needing legal help to wrap things up.
When it comes to a small business, I’ve seen so many companies where the owner personally guaranteed loans or lines of credit that when the company doesn’t survive, it takes the owner’s finances down with it.
I’ve also seen far too many mom-and-pop shops that started by borrowing from retirement funds only to lose everything.
Please don’t let your pride hold you back from looking for a way out instead of digging the pit of debt even deeper.
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