If you’re reading this, you’re probably a few days out from a bounced ACH, or you’ve already bounced one and you’re trying to figure out what to do before Monday morning. Here’s the thing most business owners don’t realize: the window to renegotiate an MCA is before you default, not after. Once you default, the leverage flips entirely. The funder accelerates, files the UCC notices, and now you’re negotiating from the floor instead of the table.

Short answer: You have more leverage than you think, but only if you move before the first missed payment. The funder doesn’t want to sue you. Litigation is expensive, UCC enforcement is slow, and a business that’s still operating is worth more to them than a business that’s been choked off. Use that.

Here are seven things you can do, in the order you should try them.

1. Call before you miss, not after.

This is the single biggest mistake business owners make. They wait. They hope next Friday’s deposits will cover it. They don’t. Then the ACH bounces, and now you’re calling the funder from a position where they already know you’re in trouble. Call three days before the debit. Tell them revenue is down. Ask for a reduction. You’d be surprised how often they’ll say yes, because the alternative (for them) is collections, and collections is expensive.

2. Ask for a reduction, not a pause.

Most funders will not give you a full pause on payments. What they will do, more often than people realize, is cut the daily debit in half for two to four weeks. This is called a reduction, or a modification, depending on the funder. You want this in writing, via email, not a verbal agreement with whoever picked up the phone. Verbal agreements with MCA funders are worth nothing when the collections team calls you two weeks later asking where the full payment is.

3. Offer a lump sum at a discount.

If you have access to any capital at all – a family member, a tax refund, a pending invoice – you can often settle the full balance at 50 to 70 cents on the dollar, before default. The earlier you are in the term, the less of a discount you’ll get. The further in you are, the more the funder’s already made their money back, and the more willing they are to take a number and move on. This is especially true if you’re funder number two or three in a stack, because those funders know they’re last in line if things go bad.

4. Restructure the term, not just the payment.

Some funders will extend the payback period from 6 months to 10 months, which drops the daily payment significantly without changing the total owed. This is not a discount. But it’s cash flow relief, and for a lot of businesses, cash flow is the problem, not the total. Ask specifically for a “term extension” – that’s the language they use internally.

5. Consolidate before you stack.

If you’re thinking about taking a second or third MCA to cover the first one – stop. This is the trap that ends most businesses we see at Delancey Street. Stacking triggers the default clause in the original agreement (virtually every MCA agreement has this), and now you’ve defaulted on funder one by accepting funder two. Instead, look for a consolidation loan, or a reverse consolidation, which pays off the existing MCA and gives you a single, smaller payment. The terms aren’t great. They’re better than stacking.

6. Get everything in writing, and read the modification agreement carefully.

When the funder agrees to a modification, they’ll send you a document. Read it. A lot of these modification agreements contain a clause that waives any claims you might have against the funder, reaffirms the personal guarantee, and in some cases, extends the UCC filing. You can sign these – most business owners do – but know what you’re signing. If you can, have an attorney look at it. Not a general attorney, someone who does MCA work specifically.

7. If negotiation fails, talk to a settlement firm before you default.

This is where I have a bias, so take it for what it is – we do this work. But the reason I’m telling you to call before you default is simple: once you default, the funder’s position hardens. Their attorney is involved. The UCC notices are out. The restraining order is being drafted. Pre-default, a settlement firm can often negotiate a reduction or a restructure that keeps you out of litigation entirely. Post-default, we can still help, but the terms are worse, the timeline is faster, and the stress on you is higher.

One more thing.

None of this works if you’re not honest with yourself about the numbers. If your revenue is down 40%, a 20% payment reduction isn’t going to save you. You need to look at what you can actually afford, and negotiate to that number, not to what you hope the next two weeks will look like. Funders can smell optimism. They’ll give you a modification you can’t meet, and when you miss it, you’ve now defaulted twice – once on the original, once on the modification – and your leverage is gone.

The business owners who come out of this in one piece are the ones who moved early, told the truth about their numbers, and got the agreement in writing. The ones who don’t are the ones who waited, hoped, and called us the day after the account got frozen.