Escaping the MCA Trap
MCAs are everywhere. They offer fast cash with minimal hassle, appearing to be the perfect solution when a business is in a tight spot. But here’s the hard truth: MCAs might not be the lifeline they seem to be. In fact, they could be the trap draining the financial health of your business without you even realizing it.
The Dangers of An MCA
Here are a few crucial points about MCAs that every business owner needs to understand:
They don’t help build credit: Unlike traditional loans, MCAs don’t report to credit bureaus, meaning they won’t contribute to building or improving your business credit.
They don’t set you up for future financing: Taking an MCA won’t pave the way for better financing options down the road—it only locks you into high-interest debt.
They come with extremely high interest rates: Interest rates of 30% to 50%+ are common, which can be financially crippling.
They drain your cash flow: Payments are made quickly—daily or weekly—and they can seriously harm your business’s cash flow.
Why Businesses Continue Using MCAs
The simple answer: They’re quick, easy, and seem like the only viable option during a financial emergency.
However, the reality is that while MCAs might offer a short-term fix, they often create long-term problems. The longer a business remains in the MCA cycle, the harder it becomes to escape, and the more expensive the debt grows.
Is There a Way Out?
The good news is that businesses can break free from the MCA trap. There is an alternative—a path to replacing high-cost, short-term loans with real, long-term financing options.
For instance, last week, Adam Esker, Director of Business Lending at Rate Tracker, helped a client refinance two separate MCA loans:
One with an interest rate of 42%.
Another at 36%.
These were consolidated into a single 3-year term loan at just 12.5% interest.
The result? A massive improvement in cash flow, credit score, and overall business growth.
Ready to Stop the MCA Madness?
If your business is stuck in the MCA cycle, it’s critical to take action before the debt continues to escalate. Rate Tracker can help you break free—quickly and efficiently. Don’t wait until it’s too late.
Act now, and set your business on the path to financial health and growth.
