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Commercial debt settlement is a negotiation process where a third party (the settlement firm) works with your creditors—in this case, MCA funders—to agree on an amount that is less than the total balance you owe.

Because MCAs are structured as a “purchase of future receivables,” the funder technically “owns” a piece of your daily sales. Settlement firms aim to break this cycle by proving your business is in financial hardship, eventually convincing the funder that taking a 40% – 60% payout is better than risking a total default or bankruptcy where they might get nothing.

DebtResolvePro differs from other commercial debt settlement firms in these ways:

• MCA Specialization: We understand the specific legal nuances of MCA contracts, such as Confessions of Judgment (COJs) and UCC liens, which standard commercial debt settlement companies aren’t equipped to handle.
• Attorney-Led Defense: We use actual legal counsel to respond to “breach of contract” notices and other funder claims.
• Business Continuity: Our focus is on your ultimate success and protecting your daily cash flow and bank accounts from being frozen, rather than just reducing the monthly bill.

Most reputable commercial debt settlement firms operate on a fee for service model. This means:

• The Fee: Typically, 30% of the total debt enrolled.
• Escrow Maintenance/Legal Plan Fees: There may be small upfront charge and recurring monthly fees for a dedicated escrow account where you build the settlement funds and a legal plan to provide you legal representation if needed.

The timeline for MCA settlement is much faster than personal debt because the “burn rate” of daily withdrawals is so high.

• Phase 1 (Negotiation): Usually begins once an escrow balance is accumulated to offer as a settlement.
• Phase 2 (Settlement): Most individual MCA positions are settled quickly once an escrow balance is accumulated. 
• Total Program: If you have multiple “stacked” MCAs, the entire program could take as long as  4 to 8 months to fully resolve all accounts.

To build a “hardship case” and prove you can’t afford the daily withdrawals, you’ll generally need:

• MCA Contracts: The original signed agreements for all active advances.
• Bank Statements: The last 3–6 months of business bank statements (to show declining balances or “NSF” fees).
• Creditor List: A list of all funders, their daily withdrawal amounts, and the remaining balances.

Yes, in the short term. 

• Business Credit: Your business credit (Dun & Bradstreet, Experian Commercial) will show “Settled for less than full amount,” which is a negative mark.

• Personal Credit: If you signed a Personal Guarantee (PG) which most MCA funders require and you stop making payments during negotiation, it can show up as delinquent on your personal credit report.
• The Trade-off: Most business owners choose this because the alternative (total business failure/bankruptcy) is far more damaging. Once the debt is settled, you can begin rebuilding your score by paying remaining vendors on time.

A form of business financing where a company receives an upfront lump sum of cash in exchange for a portion of its future sales (receivables), typically credit card or debit card sales. It is technically a sale of future revenue, not a loan.

The lump sum of capital provided to the business upfront by the funder. Also known as the Purchase Price.

The financial institution or company that provides the Merchant Cash Advance.

The multiplier (expressed as a decimal, e.g., 1.2 or 1.4) used to determine the total repayment amount. It is the cost of the financing and is used instead of a traditional interest rate or Annual Percentage Rate (APR).

The total amount the merchant must repay to the funder. It is calculated by multiplying the Advance Amount by the Factor Rate. (e.g., $\$50,000 \times 1.3 = \$65,000$ Purchased Amount)

The fixed percentage of the business’s daily or weekly sales that is automatically deducted for repayment until the Purchased Amount is paid in full.

The estimated time frame (usually 3 to 18 months) over which the advance is expected to be repaid. Since repayment is tied to sales, the actual period can vary.

An electronic network used to transfer funds between bank accounts. This is the common method for the funder to automatically deduct the agreed-upon repayment amount from the merchant’s bank account (ACH debit) on a daily or weekly basis.

A repayment method where the credit card processor automatically diverts the Holdback percentage of each credit/debit card transaction directly to the MCA funder before the rest of the sale reaches the merchant’s bank account.

The most common repayment schedule where a portion of the sales is collected every business day until the Purchased Amount is satisfied.

A one-time fee charged by the funder for processing and underwriting the advance, often deducted from the Advance Amount before the funds are wired to the merchant.

The act of a business taking on a second (or third, etc.) Merchant Cash Advance before the previous one is fully paid off. This is generally discouraged as it significantly increases the daily repayment burden.

A controversial legal clause sometimes included in the contract that, in some states, allows the funder to obtain a court judgment against the merchant (and often the personal guarantor) without a trial if the merchant defaults on the agreement.

A provision in the contract that allows the merchant to request a reduction in the daily or weekly payment amount if their sales significantly decline, which is intended to maintain the transaction’s legal status as a sale of future receivables (rather than a fixed-payment loan).

A lien filed under the Uniform Commercial Code by the funder against a business’s assets or future receivables to secure the transaction. This makes the funder a creditor on record.

An independent sales agent or broker who works to connect merchants looking for capital with MCA funders. They typically earn a commission for arranging the deal.