The Problem with Online MCA Debt Relief Promises

When distressed business owners search online for merchant cash advance help, they’re often met with promises of fast relief and massive payment reductions. But for borrowers, lenders, and restructuring professionals alike, those promises come with a cost—and in many cases, catastrophic risk. Understanding the risks behind these promises is the first step toward identifying real solutions.

This article exposes the most common MCA debt relief schemes—including so-called '80% reduction programs,' 'stall and save' strategies, and reverse consolidations—and explains how real restructuring works to resolve debt while protecting operations, preserving cash flow, and restoring a path to conventional funding.

How MCAs Undermine Secured Lending and Lending Relationships

For lenders, the threat is especially urgent. MCA providers are often referred to as MCA ‘lenders’ despite the fact that their products are not loans. As such, MCAs bypass traditional underwriting standards, do not observe perfected lien positions, have direct access to operating accounts and favor collections actions which interfere with business receivables—often undermining the very collateral that supports secured loans. They do not adhere to intercreditor agreements, creating chaos in an otherwise orderly system.

“Time after time, we see solid companies looking for financing because of a growth opportunity and find that they have already taken MCA money under the pretense that it was a legitimate  bridge loan and are now over-leveraged and unfinanceable,” says Haze Walker, Lawrence Financial.

Merchant Cash Advances are a Barrier to Conventional Funding

Despite often being marketed as a temporary solution, merchant cash advances are not a bridge to conventional financing. They are, in fact, a barrier to it—rapidly overleveraging businesses, degrading cash flow, and triggering systemic breakdowns in lending relationships.

And with MCAs embedded in the capital stack, the damage compounds: refinancing becomes all but impossible, senior lender collateral is increasingly exposed, and borrowers become more desperate for a way out. 

It’s in this environment of urgency and confusion that a second threat emerges—predatory MCA debt relief schemes that promise resolution but often deliver more chaos.

“In the event of default, or even prior to default if payments to the MCA cease, both legal and illegal collection efforts that an MCA will engage in are epic enough to make a loan shark proud.” — Ben Nicholson, Fortis Business Advisors, in Journal of Corporate Renewal.

This climate of intimidation and urgency has created fertile ground for debt relief models that are every bit as predatory and structurally flawed as the MCA products they claim to replace.

The “80% Payment Reduction” Pitch: A Risky Bet in MCA Restructuring

A newer trend in the MCA debt settlement market promotes massive payment reductions—up to 80%—through aggressive negotiation with MCA lenders. And in some cases, this may be partially effective: some MCAs might agree to modified payment terms.

But here’s what’s not mentioned.

These firms rely on every MCA lender agreeing to revised terms. That’s rarely the case in reality. If even one refuses, default will almost certainly trigger a UCC 9-406 notice—a devastating collection action that diverts a business’s receivables directly to the MCA lender.

“Citing Section 9-406 of the UCC, [the secured party] also notified [the account debtor] that payments made to any party other than [the secured party] would not discharge [the account debtor’s] obligations and liabilities with respect to its accounts receivable.” — Hodgson Russ LLP.

In plain English: a UCC 9-406 notice tells customers they now owe the business’s revenue to the MCA—not the business itself. Lacking legal clarity, most UCC 9-406 recipients will simply stop paying until the matter is legally resolved. But for the business, that’s time it can’t afford—as cash flow dries up, and it can no longer make payroll, pay rent, or service vendors.
A ‘relief’ model that relies on universal cooperation among MCA lenders is a recipe for disaster. If payment relief is the goal, it must be paired with a structural strategy that protects the business—its receivables, its operating accounts, and its ability to function—even if one or more MCAs refuse to negotiate.

Reduced payment terms may help—but they cannot be the only strategy.

The “Stall and Save” Strategy: Delay Masquerading as Merchant Cash Advance Help

This is the model that mirrors the playbook of traditional consumer debt settlement. It instructs business owners to stop paying their MCA lenders entirely and instead save toward a lump-sum settlement offer. The firm charges hefty upfront fees and begins diverting payments into a so-called “settlement fund”—but controls that account.

Here’s what typically happens:

• Step 1: The business pays 15–20% of the enrolled debt as an upfront fee—before any creditors have even been contacted.

• Step 2: The firm advises the business to stop paying its lenders, telling owners to “trust the process.”

• Step 3: Monthly payments are redirected to an escrow fund controlled by the settlement firm—or worse, commingled into the firm’s own operating account, exposing the funds to mismanagement or outright fraud.

• Step 4: Time passes. Creditors grow impatient. Lawsuits are filed. Accounts are frozen.

• Step 5: Months later—often after irreversible operational damage—a settlement offer is finally made. But by then, the business may no longer be viable.

“Their primary ‘strategy’ is most often to stall creditors by advising business owners to stop making payments and instead save money for a future lump-sum settlement. What is sold as a structured plan is, in reality, a delay tactic designed to maximize their earnings at the business owner’s expense,” says Gerard Celmer, COO of Rise Alliance.
 
Let’s say a business stops payments on $100,000 in MCA debt. Here's what that might look like:

• Within 14 Days: Late fees and penalties begin piling up.

• Within 30 Days: Lenders accelerate the debt; the full balance becomes immediately due.

• Within 60 Days: The first lawsuit arrives—often without the owner's knowledge—until their bank account is frozen.

• Within 90 Days: Assets are seized, vendor relationships collapse, and the business is in freefall.

“I would never advise a business to simply stop paying MCA lenders. It’s a recipe for disaster,” Celmer adds.

This model doesn’t just fail to protect the business—it often guarantees its collapse.
And the cost? For that same $100,000 enrolled in a “stall and save” program, the total out-of-pocket expenses often exceed $60,000—long before any creditors receive a dime:

• Upfront fee: $15,000 (15%) — Paid before negotiation even begins

• Monthly fees: $1,000+ — Paid while collection risk escalates

• Success fees: $8,750 (35% of any negotiated “savings”) — Cuts deeply into any settlement

• Extension fees: $36,000 over three years — The longer it drags out, the more the firm profits

Total paid: $60,000+—often with no actual resolution.

Reverse Consolidation: A Misleading Form of MCA Refinancing

One increasingly common tactic marketed to businesses in distress is reverse consolidation MCA financing—a product often disguised as a form of debt relief. In reality, it’s just another high-cost MCA that adds to the burden.

In a reverse consolidation, a business that’s struggling to keep up with existing MCA payments is offered a new advance with longer terms and lower daily or weekly withdrawals. The pitch is simple: "We'll pay off your existing MCAs and give you breathing room." But behind the scenes, most of these deals come with sky-high factor rates, renewed personal guarantees, and are ultimately a new MCA position that piles more debt onto the business.

Reverse consolidations don’t resolve MCA debt. They buy time at a premium, often worsening the very financial distress they claim to solve.

For lenders and advisors, the red flag is clear: when a borrower enters a reverse consolidation, they’re not restructuring—they’re doubling down on high-cost debt with no path to recovery.

What Real Merchant Cash Advance Restructuring Looks Like

The true alternative to MCA settlement schemes is a restructuring plan that addresses MCA debt and other liabilities, while protecting the business’ operations and underlying value. Unlike tactics that focus solely on delay or negotiation, legitimate restructuring addresses the root causes of distress while protecting the business throughout the process.

A real restructuring strategy begins with easing the payment burden through creditor negotiations—but that’s never the entire solution. Because not all creditors will cooperate, a viable plan must also include legal and structural protections that shield the business from lawsuits, UCC 9-406 notices, and operating account interference. Without these safeguards, even a single uncooperative MCA can unravel everything. 

A restructuring firm would, for example, understand how to leverage an MCA borrower’s “right to reconciliation,” or when an Article 9 restructuring may be required to remove MCAs from the balance sheet altogether. The point being, whether it be UCC 9-406 risk to receivables, borrower rights, or balance sheet restructurings - these are far outside of the scope of understanding and practice of debt relief shops. 

In short, a well-executed restructuring will protect the business’s revenue and receivables; but with the most prevalent business debt relief schemes, the opposite is true. 

Unlike predatory MCA relief schemes that expose the business’ revenue and receivables, a well-executed restructuring will ensure these remain secure throughout the restructuring process.

When operating accounts remain secure—even in the face of hostile creditor actions—the company retains the cash flow necessary to function. This insulation preserves vendor relationships, maintains customer confidence, and avoids the operational collapse often triggered by scorched-earth tactics like payment stoppages or account freezes.

Transparent, aligned fee structures are another hallmark of legitimate restructuring. There are no enrollment fees, no vague advisory charges, and no billing for inaction. Compensation is earned through resolution—not delay—ensuring that incentives remain aligned with outcomes.

The ultimate goal is to restore the business to responsible, conventional financing. That means positioning the company to refinance out of predatory capital, rebuild working capital, and reenter vendor and credit markets with a clean slate. Restructuring should leave a company healthier, fundable, and focused on long-term growth.

And once the immediate crisis is resolved, ongoing monitoring ensures that the business stays on track. Financial discipline, performance benchmarks, and strategic oversight help ensure that the business never again becomes overleveraged—or vulnerable to the same trap.

Cash flow relief alone isn’t enough. Without legal structure, strategic insulation, and a path to non-predatory funding, even the best intentions can fall apart. Real restructuring prepares for that—and prevents disaster.

Final Thought: One Shot at Recovery

For borrowers, lenders, and advisors alike, the window for effective intervention is narrow. When a borrower falls into the merchant cash advance trap, delay only increases the risk of collapse. Knowing the red flags, rejecting false solutions, and acting decisively to restructure can make the difference between total loss and renewed viability.

For lenders finding themselves in the role of trusted advisor to a business owner in MCA distress, ABL Advisor has identified the following companies for referral:

A Resource for Lenders: Recommended Firms for MCA-Distressed Borrowers

Second Wind Consultants – Widely regarded as the industry’s foremost expert in MCA resolution. Second Wind specializes in comprehensive debt restructuring strategies, often utilizing UCC Article 9 to execute non-bankruptcy reorganizations that eliminate predatory capital while preserving operations.

Rise Alliance – A rare, transparent provider of structured MCA settlement support. Rise works with smaller businesses that may not require full corporate restructuring but still need legal protection, revised payment terms, and a roadmap to future bankability. Notably free from the deceptive practices described in this article.

Lawrence Financial Group – A national commercial loan advisory firm with deep expertise in matching distressed borrowers to viable refinance options. They also provide guidance on when restructuring is necessary before a borrower can qualify for new credit.

Breakout Finance – A reputable source of junior and senior secured debt. Breakout offers refinancing options tailored to replace MCA obligations, including revenue-based working capital lines for businesses with sufficient cash flow strength.