The TRUTH about MCA 'Settlement/Refinancing'

More business owners than ever before are shouldering expensive MCA debt. The alternative lending industry has never been larger as owners are taking on more MCA debt in 2025 than ever before. Lack of other financing options for sub-prime business owners as well as the current inflationary state have created a heavy borrowing environment. If your business is paying multiple MCAs at once, here is what you need to know!

Understanding MCA ‘Settlement/Refinancing’:

If your business currently has 1 or more MCA, you are undoubtedly receiving many calls about ‘Refinancing your Current MCAs’ from companies that promise to ‘Negotiate and Settle MCA debt directly with the Funders’. Here is what these companies do:

1. They tell you to stop paying the current MCA loans, which will put you in contract default.

2. They will require you to start paying them instead.

3. They will contact the MCA funders you owe and attempt to settle the debt.

The problem with this option is that the MCA funders do not have to negotiate with the ‘Settlement’ company that you partnered with. In fact, the ‘settlement’ company is in a grey legal area because they are attempting to interject themselves between a business agreement between your business and the funder. This is called ‘tortious interference’, more specifically, tortious interference with contract. The ‘Settlement’ company is a third party that intentionally disrupts or induces a breach of an existing agreement between two other parties, causing economic harm. The MCA funder does not have to settle with and is not required to work with the third party ‘Settlement’ company. In fact, from what we can see in the industry, the MCA companies will still move forward with a default and file collections on the business they were in contract with.

‘Settlement’ MCA companies are trying to make money by taking advantage of your business financial hardships and by interjecting themselves between your initial agreement are violating contract law. Unfortunately, these ‘Settlement’ companies do more harm than good and take money from the business without actually paying down the original MCA debt.

The better option is a Reverse Consolidation. This program helps businesses extend the payback terms of all MCA positions. Here are the benefits:

1. Lower combined MCA payments: Generally, weekly cash flow savings are from 25 to 50%.

2. Keep more Operating Cash in the Business: Since the business is paying less each week, there is more money in the business.

3. Don’t Risk Default: Your current MCA funders will now know that you are in a Reverse Consolidation and if you keep paying the MCA debt in full, you will not risk default. If you stop paying your MCA debt and partner with a ‘MCA Settlement’ company, you will immediately go into default.

4. Don't Risk Lawsuits: A reverse consolidation ensures that you will not have to enter default, where you will need to pay lawyers and legal fees…at the same time paying a ‘Settlement’ company. This may cause you to actually end up paying more than if you just paid the MCA balances in full.

A Reverse Consolidation is a much better alternative to partnering with a ‘MCA Settlement’ group. Although the burden of paying multiple cash advances may seem insurmountable, Reverse Consolidations have helped many businesses exit the cycle of MCA borrowing.