What MCA Debt Restructuring Means
Restructuring means modifying existing MCA terms to make them sustainable. This can involve reducing daily payment amounts, extending the repayment timeline, reducing the total payback, converting daily payments to weekly or monthly, or combining multiple obligations into a single modified agreement.
When Restructuring Makes Sense
Restructuring is appropriate when your business is viable but current payment terms are unsustainable. The business generates enough revenue to support some MCA payments, just not at the current rate. If it cannot support any payments, settlement or bankruptcy may be more appropriate.
How to Approach Restructuring
- Assess actual capacity. Determine exactly how much you can afford in daily or weekly payments while maintaining all essential obligations.
- Document the need. Prepare bank statements, profit and loss statements, and cash flow projections showing why current terms are unsustainable.
- Engage an attorney. Restructuring negotiations are more effective with legal representation because the funder knows the alternative may be default or bankruptcy.
- Propose specific terms. Do not just ask for lower payments. Propose a specific restructured amount, schedule, and duration based on your financial analysis.
- Get everything in writing. Restructured terms must be in a formal modification agreement signed by both parties.
What Funders Will Accept
Funders generally consider reducing daily payments by 20 to 50 percent with extended terms. They may waive late fees as goodwill. They rarely reduce the total payback through restructuring alone since that is settlement territory. And they will not extend repayment beyond 12 to 18 months from original funding.
The Legal Leverage
Your strongest tool is the implicit threat of alternatives worse for the funder. If your attorney identifies recharacterization defenses, fraud claims, or unconscionability arguments, the funder’s incentive to restructure increases because litigation could produce a much worse outcome for them than modified payment terms.