5 Ways to Get Out of a Merchant Cash Advance (and other Toxic Business Loans. )

5 Ways to Get Out of a Merchant Cash Advance (and other Toxic Business Loans. )

We occasionally help customers access this type of business financing , but we’re much more likely to talk you out of a merchant cash advance than to sell you on the idea.

…that you’d be better off snorting Drano than signing up to let one of these leeches suck every last dime of profit out payday loans in Hicksville of your business.

Special Note: If you’re stuck in merchant cash advances that you can’t pay, you might want to talk to a negotiator to help make your payments lower. We partner with a great company that can help you get out of a daily payment product.

What’s Wrong with Merchant Advance Payments?

It’s like being one of those dudes waiting for the liquor store to open at 6:30 AM so they can score a $3 bottle of Popov on the way to work.

Just like guzzling hooch, you know the advance is rotting your business from the inside out, but you’ll die without more money.

Often, since the huge payments are sucking away every dime of profit, business owners fail to grow out of the loans.

What is Business Loan Stacking?

Since each advance usually sucks away 10% or more of your monthly revenues, once you get past 2 advances you’re often caught in a death-spiral.

There are companies out there that specialize in “3 rd , 4 th and 5 th position liens…” meaning they’ll advance you funds (at huge costs) even if you’ve already gotten yourself into debt beyond your ability to pay it down.

If you’re at the point where you need a 3 rd , 4 th or 5 th cash advance, it might be time to do some soul searching.

You’ll be better off getting yourself out of a merchant cash advance (or other type of daily payment loan) than adding another one.

Replace a Cash Advance with a Low Rate Term Loan

If you have good credit, sometimes a long term monthly payment loan at reasonable interest rates can dramatically reduce your monthly payments.

One negative is you’ll still have to pay the entire amount of your merchant cash advance because virtually none of these products allow you to avoid finance charges with early payment.

  • At least a 600 credit score
  • Be profitable in at least 1 of the past 2 years
  • Be able to supply 2 years of tax returns
  • No major negatives (such as large tax liens or a bankruptcy in the last 7 years)

It’s not a great loan, but you will actually know the interest rate, and payments can be stretched to ten years.

There’s no denying the fact that these high rate loans are lousy. However, they are less lousy than your current situation if you’re saddled with multiple cash advances.

In many cases, we find that even with astronomical rates, refinancing into a 10-year term can drop your monthly payments by 50% or more.

Use Asset-Backed Loans to Pay Off Cash Advances

If you own assets such as real estate, trucks, or heavy machinery, you can often get capital using the assets as collateral.

The negative of course, to collateralized loans is that you can lose your assets if you don’t make the payments.

Get a Negotiator to Help You Out

This is true whether it’s a merchant cash advance, an ACH loan (the kind that draw out of your bank every day) or any other debt.

You have to be careful though, since some companies will try to charge you large fees before they’ve done anything for you.

File for Bankruptcy

If you have no options to get out, and you cannot keep up with daily payments, you can always file bankruptcy.

The only words of wisdom to impart is to speak to an attorney or someone else who is qualified to give bankruptcy advice.

If you’re stuck in any sort of business cash advance, your best bet is to find any way you can to get out.

Leave a Comment

Your email address will not be published.

Scroll to Top