Which funding products does this apply to?

Merchant Cash Advance, Working Capital, Revenue-Based Financing. Each has its own page listing the funders in this directory that offer it and what each one publishes about its terms.

Are the figures here quotes?

No. Every worked example is labelled illustrative and exists to show the arithmetic. What a particular lender charges is on that lender's page, where it publishes it at all.

The Find Me Funders research desk. Some drafting is AI-assisted, and every page that is says so at the top, including whether a person has checked its claims yet.

How do I know a figure here is right?

Where a page carries the green notice, its claims were checked against the sources listed at the end and a reviewer is named. Where it carries the amber one, nobody has verified it yet and you should confirm anything you plan to act on.

Are the examples real deals?

No. Every worked example is labelled illustrative and exists to show the arithmetic. What any particular lender charges is on that lender's page, where it publishes it.

Why do you never say what a typical rate is?

Because we cannot source it. A market average assembled from lenders who do not publish prices is a guess with a decimal point on it. Where a lender publishes a figure, we show that figure and say where it came from.

Is this financial or legal advice?

No. It is general information about how these products work. Outcomes depend on your contract and your state, and a lawyer or accountant licensed where you are is the person to ask about your situation.

Can I reuse this content?

Quote a paragraph with a link back. Do not republish whole articles.

What happens if you default on a merchant cash advance

The remedies section lists what becomes permitted. Which of it is used is a commercial decision, and it varies more than either optimism or dread suggests.

By Find Me Funders research desk Updated 14 September 2026 1014 words 5 min read

Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.

What happens if I default on a merchant cash advance?

Default typically permits the holder to add fees, accelerate the entire uncollected purchased amount, enforce its security interest in your receivables — including notifying your customers to pay it directly under UCC Article 9 — demand payment from you personally under the guarantee, and sue in the venue named in the agreement. It may also sell or place the file with a collection firm or law firm. What actually happens depends on the holder, the balance and your state, and none of it is automatic.

What default usually is

Not only a missed payment. Most agreements also list blocking a debit, closing the debited account, taking additional financing, changing processors, misrepresenting anything in the application, and a range of insolvency and third-party events. Read your own default section before assuming which one applies.

What becomes permitted

Fees and acceleration.Default fees plus the entire uncollected balance becoming due at once. On an advance that is the full remaining purchased amount, not a discounted principal, because the cost was fixed at the outset.

Enforcement against receivables.Where the funder holds a perfected security interest in your accounts, §9-607 of Article 9 permits it after default to notify your customers to pay it directly. No court judgment is required for that step, which surprises people. The uniform text is at law.cornell.edu/ucc/9.

Redirecting card settlement.In split-funded deals, instructing the processor to send more or all of the settlement.

The personal guarantee.A demand to you personally, for the accelerated amount plus costs. Whether you signed a guarantee of payment, a performance guarantee or a validity guarantee changes what has to be shown, not whether the exposure exists.

Litigation.Suit in the contractual venue, or where a confession of judgment was signed and is enforceable in that forum, entry of judgment without a suit. State law on confessions varies and New York restricted the practice in 2019.

Post-judgment enforcement.After a judgment: restraining notices or garnishments served on banks, levies, judgment liens on real property, and asset discovery. Procedures differ by state.

Sale or placement.The file may move to a collection agency, a purchaser or outside counsel, each with different authority and different economics.

What varies

Almost everything. Holders differ in how quickly they escalate and how much they negotiate. The size of the balance drives whether litigation is worth their cost. Your state's law governs enforcement and exemptions. Whether the file has been sold changes who decides. Anyone who tells you confidently what will happen to you is guessing.

What a negotiation actually looks like

Most defaults end in an arrangement rather than a courtroom, and the arrangements share a shape.

A reduced remittance for a defined period.The commonest outcome: a lower daily or weekly figure for six to twelve weeks, with a stated restart. Holders agree to these because collecting something is worth more than the cost of the next rung. What they want in exchange is documentation — statements, a short explanation, and a figure you will actually meet.

A lump-sum settlement at a discount.Available where the holder believes recovery is doubtful and you can produce cash from somewhere that is not another advance. The discount depends entirely on their view of collectability, so there is no typical figure. Get any settlement in writing, with the words "in full and final satisfaction", before a dollar moves.

A restructure into a new instrument.Sometimes offered, and worth reading with care: a new agreement may reset the default, add a new guarantee, extend the term and increase the total. That can be the right trade or a much worse position, and the only way to know is to compare total dollars under both.

Three things to bring to the call, every time: the number you can pay, the dates you can pay it, and the statements that support both. Three things to avoid: a figure you hope to meet, a promise about a receivable that has not been invoiced, and a proposal made verbally and never confirmed by email.

What to do in the first week

Collect the agreement, the guarantee, the security agreement, any confession of judgment, and the full payment history.
Get the current balance and a payoff figure in writing.
Work out what the business can actually pay per week for the next two months. Not the best case.
Call servicing, state the facts briefly, and put the proposal in numbers. Follow up by email the same day.
Speak to a lawyer before signing any modification, settlement or new financing, and immediately if you are served with anything.

Do not close the account or place a stop payment as a first move — in most agreements that is itself a default and it accelerates everything else.

What a default reaches beyond this agreement

Owners plan for the obligation in front of them and get caught by the ones attached to it.

Cross-default in your other financing.An event of default under one agreement is frequently a default under others, including facilities that are entirely current. Read the cross-default clauses in every agreement you hold before you assume the problem is contained.

Your bank.Repeated returned items, a restraining notice or a garnishment can end a banking relationship. A business that loses its operating account in the middle of a default has a much larger problem than the default.

Card processing.Where the deal is split-funded or the processor has been notified, settlement can be redirected or the merchant account closed. Moving processors mid-default is itself an event of default in most agreements.

The personal guarantee, and what it reaches.A judgment against you personally is enforced under your state's law, with exemptions that vary widely. Which assets are protected — a home, a retirement account, a vehicle — is a question of state law and is worth asking a lawyer about before, not after.

Your suppliers.A UCC filing, a judgment or a customer contacted about payment all travel. Trade credit tightening is a common second-order effect and it arrives without warning.

None of this is a reason to panic, and none of it is automatic. It is a reason to treat the first missed debit as the moment to get advice rather than the moment to hope.

This is general information, not legal advice, and nothing here predicts your outcome. What your holder may do turns on your contract and the law of the governing state, so a lawyer licensed in that state is the person to read your documents and advise you.