Top 5 signals of MCA distress

Identifying Distressed Merchants

For brokers specializing in reverse consolidations or debt restructuring, identifying the top 5 signals of MCA distress is essential. Recognizing these signs early allows you to provide timely financial relief to merchants drowning in daily payments.

The 5 Key Signals

1. Multiple Stacked Advances: A merchant taking out 3 or more concurrent MCAs is a primary indicator of cash flow issues.
2. NSF (Non-Sufficient Funds) Fees: Frequent overdrafts or NSF fees on bank statements.
3. Declining Daily Balances: A consistent drop in average daily bank balances over a 3-month period.
4. UCC Lien Spikes: Sudden appearances of multiple UCC filings from different funders.
5. Missed Payments: Any history of missed or delayed daily ACH deductions.

Providing Solutions

When you spot these MCA distress signals, approach the merchant with a clear, viable path to reduce their daily burden through term loans or consolidation programs.