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How to Escape Harmful Business Loans & Merchant Cash

Posted On: March 8, 2018 author Paul Kendall

Many business owners are used to taking out loans and using other forms of financing to keep their business operating. From keeping the lights on during slow months to using promotions to boost sales, outside financing can be a great tool to help business owners.

But those same tools can also be a crutch in the wrong circumstances. So what is a business owner to do when they get caught in a situation where they have too many open loans and feel stuck in financing programs, such as harmful business loans and too many merchant cash advance deals active?

While there are pros and cons to every type of business financing out there, not all of them are generally going to be in your best option: in other words, merchant cash advance programs and some business loan deals.

So how do you get out of merchant cash advance programs that don’t actually help your business enough to make the hassle worthwhile?

Watch Out for Shady Lenders


It’s not always easy, especially when you are just getting into the game of business and trying to find suitable funding.

The first thing most people will do is look on Google for available financing to help their business get started. And in some cases, those future business owners will land on a “merchant cash advance” program’s website, who will be happy to give you an estimate based on the metrics you provide (amount of cash needed, credit score, annual revenue, time in business, etc.).

What’s not clear in the beginning is that many of the “offers” that get presented are, in many cases, not even accurate. In most of those situations, the interest rate they “offer” is not going to be the interest rate you actually get when you try to sign up for it.

Business Cash Advances Are Deceptively Expensive

When talking to a lender from a merchant cash advance program, they’ll typically quote payments on a per-day basis, not in a monthly or annual point of view that most businesses are used to.

This makes it hard to understand the sheer volume of payments that you’ll be making at the first glance. If those lenders told you the amounts in a per-month perspective, they would probably get turned away more often than not.

If you find a lender trying to recommend the rates to you per day, either ask them to quote it in per month, or multiply their daily rate by the number of days in a month you are open. This will help you to understand the reality of how much a cash advance program is going to cost you. Typically they will bill you Monday through Friday. These type of loans were designed for businesses that have 20+ deposit transactions a month.

Don’t Get Stuck in a Loan Stack

Loan stacking is when you already have multiple loans active for your business, but you’re not making any significant headway on paying them off or growing your business at the same time.

It’s not uncommon for people in this scenario to feel like they have to take out a loan just to get out of the “stack.” There are actually lenders out there who specialize in providing loans to people who are stuck in a black hole of business loans. 

Not All Loans Are Bad Loans

Yes, while generally speaking, most merchant cash advance programs are probably not going to be the best option for your business, it really comes down to your situation. Even if a lender offers their accurate rates and you find the rates acceptable, then that loan may be perfect for you.

You just have to make sure that the loan you’re taking on is the actual loan you’re going to get. Don't take a merchant cash advance loan unless you know you can double or triple the money you're borrowing by borrowing it. 

Know When It’s Time to Get Out

Loans aren’t a bad thing on the surface, especially for a growing business. But if you are falling behind on your payments and not making progress on paying the debt off, it’s time to get out of merchant cash advance programs.

There are many options available to business owners to help them get out of a harmful business lending situation.

  • Switch your merchant cash advance program with a low-term business loan.
  • Take on a high rate monthly payment loan instead.
  • Work with a financial expert to renegotiate a loan.


Generally, the goal is to restructure your financial situation so that you are breaking the pattern of having to take out loans. While it may be an expensive route in the short term, taking on higher rate plans can help you make significant progress on paying off debt.

Just think: the moment you pay off a debt, those payments you were making on “slowly paying off your loan” will go in your pocket instead.

Final thoughts on how to escape a harmful business cash advance loans & Merchant Cash Advance Programs

Don't stack your business cash advance loans. If you do make it a high priority to budget to get out from underneath them ASAP.  Stacking business cash advance loans will only slowly bleed your company into bankruptcy. 

If a business cash advance loan is the best financing option for your business than seek one that will forgive your remaining interest when you buy out early or renew the loan half way through. 

How can I apply for a better working capital loan?

Trust Capital USA has a single page application on their website. They value their customer’s time and they provide the necessary funds easily. Whether you're just starting out as an entrepreneur or have a succusful business for many years Trust Capital has a competitive working capital program for you. We will work hard to help you get out of a harmful merchant cash advance loan. 

We invite you to Call 866-458-4777. A live person will answer and assist you with How to escape a harmful business cash advance loan. 

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