NYC Business Debt Settlement Attorneys 

Merchant Cash Advances (MCAs)

A merchant cash advance (MCA) is a type of business funding that provides quick access to working capital. It is an alternative to traditional bank loans and is based on a percentage of future credit cards or other receivables. With an MCA, businesses receive a lump sum payment in exchange for agreeing to repay the lender with a portion of their future sales. This type of financing can be beneficial for small businesses that need quick access to funds but may not qualify for traditional loans due to poor credit or lack of collateral.

The eligibility criteria for an MCA vary from lender to lender but generally include terms related to the duration of the and processing a set amount of monthly sales through debit and credit cards. The repayment schedule is typically flexible and based on the amount of money received from customers via debit or credit card transactions. The application process is usually straightforward and can be completed online depending on one’s circumstances. Factors that influence approval include the business’s credit score, annual revenue, and time in business.

Merchant cash advances can be especially helpful for seasonal businesses or those with unstable cash flow who need fast access to funds without having to go through the lengthy process required by traditional lenders. However, it is important to note that merchant cash advances tend to have higher interest rates than traditional loans, so borrowers should carefully consider all their options before opting for this financial solution.

These loans tend to be very favorable to businesses who have a reduced cash flow and are in immediate need of a renegotiation in order to better reflect their current financial situation. Businesses, however, should be aware that defaulting on these loans gives the creditors a lot of triggers to force the business owner to pay (including UCC liens, freezing of bank accounts, etc.). For this reason, having a skilled professional guiding you through the reconciliation process is so important. 

Paycheck Protection Program (PPP)

The Paycheck Protection Program (PPP) is a loan program designed to provide financial support to small businesses affected by the COVID-19 pandemic. The primary purpose of these loans is to help businesses maintain their workforce and cover essential operational expenses during times of economic uncertainty. Eligible businesses include those with 500 or fewer employees, including non-profits, self-employed individuals, and independent contractors.

PPP loans can be used for payroll costs, rent, utilities, and interest on mortgage obligations, helping businesses sustain their operations amidst the crisis. The program was established under the Coronavirus Aid, Relief, and Economic Security (CARES) Act in 2020, aiming to protect small business owners and their employees from the devastating impacts of the pandemic.

A key feature of PPP loans is their potential for forgiveness, which means that borrowers may not have to repay the loan if they meet specific criteria. To qualify for forgiveness, businesses must use at least 60% of the loan proceeds for payroll costs and maintain employee headcount and compensation levels during the covered period. PPP loans come with a low-interest rate of 1% and a maturity of five years for any unforgiven portion.

To apply for a PPP loan, businesses must apply form through an approved lender, such as a bank or credit union. The applicant must provide documentation to demonstrate their payroll costs, number of employees, and other relevant business information.

Small Business Administration (SBA) Loans 

A small business is defined by the Small Business Administration as a business with firm revenue ranging from $1 million to $40 million and has between 100-1,500 employees. Ventures that fall within these standards could be eligible for a Small Business Administration (SBA) loan. These loans can provide opportunities to renegotiate settlements and offers with lenders. 

Renegotiating Settlements and Offers 

Small Business Administration (SBA) loans are a unique financing option designed to help small businesses obtain funding that might be challenging to secure through conventional bank loans or other financial avenues. Unlike traditional loans, SBA loans are partially guaranteed by the U.S. government, which reduces the risk for lenders and encourages them to offer more favorable terms to small businesses.

Eligibility and Qualifications

To qualify for an SBA loan, businesses must meet specific eligibility criteria, such as being a for-profit entity, operating within the United States, and demonstrating a genuine need for financing. Additionally, applicants must have invested their own time and resources into the business and exhausted other financing options. Collateral requirements vary depending on the loan type and size but may include personal guarantees, real estate, or other business assets.

The application process for an SBA loan typically involves submitting a comprehensive loan package, including financial statements, business plans, and relevant documentation, to an SBA-approved lender. The lender then reviews the application and, if approved, works with the SBA to secure the government guarantee.

The partial government guarantee allows lenders to offer lower interest rates and longer repayment periods than conventional loans, making SBA loans more affordable and accessible for small businesses. Flexible terms also enable business owners to tailor their loan structure according to their specific needs and growth plans.

Risks

However, there are potential risks associated with SBA loans, such as high upfront fees, strict repayment schedules, and the possibility of personal liabilities due to collateral requirements. It is essential for borrowers to carefully evaluate these factors and weigh the benefits against the risks before committing to an SBA loan.

Lawers That Get Results

The bottom line is we will help you. With the team at Raiser & Kenniff, P.C. representing you, you can have that peace of mind knowing you will be treated fairly and with respect. We will fight for you. 

“Steven M. Raiser is the managing partner and litigator assigned for trial in the unlikely event that one becomes necessary.”