Every business owner has a reason as to why they needed to borrow a cash advance in the first place. Whether it be to pay off some bills, expand, use for payroll etc, but no one expects to get into a cycle of borrowing more and more expensive money.
Business owners can get caught in the trap of borrowing more and more MCAs because of one simple reason. The reason this happens is because cash flow gets too tight to sustain business expenses AND the fast paced payments of the original advances.
This cycle of borrowing money to satisfy current debt payments is similar to maxing out your credit cards and then trying to get more credit cards to cover the cash crunch because of your current credit card payments.
We have met business owners that have 2 to even 10 MCAs at once. A reverse consolidation can work for any business with 2 or more MCAs.
This client’s debt schedule shows over $174,000 in debt with a combined weekly payment of over $5,700. We were able to provide a reverse consolidation that pumped in money on a weekly basis to cover the current MCA payments. The new payment was set at $2,300, thereby giving a cash flow discount of 60%...all while helping the client NOT default on their debts.
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Merchant Cash advances are designed to be a short-term fix for immediate business cash flow needs. Most businesses understandably aren’t heavily capitalized, and owners usually don’t have a solution when they need money for their business. MCAs are a popular solution when immediate influxes of cash are needed to solve an immediate business problem or to enact on an immediate business opportunity. But what happens when today’s solution becomes tomorrow’s problem?
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