MCA Hardship Letter: 5 Parts of a Request the Funder Can Evaluate

The hardship letter should ask for a defined change supported by records.

Before the letter is sent, before figures are copied into a template, the owner should distinguish a reconciliation request under the agreement from a proposal for discretionary relief, because the wording that follows must reflect the route the business intends to pursue and the proof that route requires.

Account Identification and Requested Action

Clarity at the top decides whether the letter can be evaluated. The business name, account number, agreement date, and specific adjustment belong in the first lines, stated in the language of the agreement.

Often we see requests that describe unaffordable payments at length while leaving the action obscure. A letter that names the provision, where one exists, and the calculation requested gives the funder a decision to make rather than a condition to interpret.

Simply state whether reconciliation or discretionary relief is sought, then keep a copy of the provision beside the outgoing letter. We would ensure the request uses the agreement terms without adopting legal conclusions the records do not support.

In LG Funding opinion on reconciliation, a New York appellate court discussed reconciliation among the factors relevant to whether repayment was absolute, and that authority belongs before the drafting advice because it explains why the existence of a clause does not establish entitlement to the adjustment the owner prefers.

The file should show the sequence.

Documented Change in Receipts

The letter must connect the request to a period, an amount, and a cause that records verify. Receipts during the affected period, compared with an accurate prior period, should come from statements and sales reports rather than estimates.

Where an amount remains provisional, the letter should say what it represents and when updated records will arrive. An assertion of certainty without support invites a request for more proof and delays the answer the business needs.

Separate the temporary effect from the continuing one, since a delayed receivable that is expected to arrive calls for a different request than a lasting reduction in receipts, and the owner should identify the basis for any expectation without presenting it as certain (a distinction the template below preserves by requiring documented amounts and a defined start date for any proposed calculation rather than a general plea tied to an uncertain future receipt).

There are exceptions, though in practice they tend to confirm the rule.

Retain the calculation used to prepare the letter so a later question can be answered from the same records. The owner should be able to support each factual statement signed.

Template Structure With Bracketed Terms

A template serves the letter only when every bracket is replaced with accurate account detail and counsel has reviewed the result where a dispute or proceeding already exists. The language below requires completion, not signature as written.

Re: business name and account. We request a specific adjustment or reconciliation under the stated provision. Receipts during the stated period were in the documented amount, compared with the accurate comparison period. Attached records support this change. We propose a specific payment or calculation beginning on the stated date. Please respond in writing and identify further records required. This letter does not change existing terms before written confirmation.

The final sentence is extremely important, and its importance is not rhetorical. Sending a request does not modify the agreement or suspend collections, and the owner needs advice before treating silence as acceptance.

Resistance to drama in the template is a discipline. Leave the records in charge of the account, a peculiar temptation to overwrite them notwithstanding, and ask for a response through a channel the business can retain.

Do not present money awaiting collection as funds already available. An accurate request is easier to revise than a promise the business cannot perform.

Delivery Records and Response Tracking

Follow the delivery instructions stated in the agreement.

Save the sent version, attachments, and evidence of receipt in one chronology, with later correspondence filed alongside.

In 2019, before the current wave of MCA disputes reached its present volume, files of this kind were often kept as loose correspondence. The practice now requires a defined custodian and a complete set.

Resist the urge to discuss the request by telephone without preserving the result, even briefly, since an undocumented conversation can alter the posture of the case against the business. Steps taken, or not taken, in the first seventy two hours after sending often decide whether the response can be assessed.

Planning for Denial or Counteroffer

Prepare the next decision before sending the request, because the funding party may approve different terms, seek more information, or decline, and the owner should know what amount remains feasible and what advice will be needed if the response does not relieve the pressure. A counterproposal should be read as a new agreement requiring review, since a reduced payment may arrive with a longer schedule or another condition, and a creditor may press for a quick signature in order to preserve its position under the original terms.

Delancey Street offers a free confidential initial review of MCA debt concerns. Its debt settlement services can provide a starting point for examining negotiation if a hardship request does not resolve the pressure. The company is not a law firm and coordinates legal matters with independently licensed counsel; confirm eligibility and availability.

We review the correspondence, identify the deficiencies, and construct a reply that addresses both the creditor position and the practical realities of cash flow. The objective is to ensure no commitment is made without counsel review. Consult and contact counsel where a lawsuit is pending, and protect and preserve the hardship file beside the litigation calendar.

Private negotiation does not create an automatic stay. Bring any formal notice to counsel at once.

Most owners do not prepare for refusal until it arrives. I understand why. It is extremely useful to know what a declined request establishes: the funder has answered this proposal on a particular record, and that answer may support the next discussion without determining its outcome.