The Industry That MCA Funders Understand Best
Restaurants are the MCA industry’s ideal customer and its most frequent casualty. High daily credit card volume makes underwriting simple. Thin margins make repayment fragile. Seasonal fluctuations, staffing crises, a single bad health inspection: any of these can reduce revenue below the threshold at which daily debits become unsustainable. The funder knew this when the advance was issued. The funder’s business model accounts for a default rate. Yours does not.
Protect Your Food Suppliers Before They Hear From the Funder
The first thing to do is secure your supply chain. If the funder holds a UCC lien with an assignment of receivables, they may contact your credit card processor to redirect payments. They may also, in some cases, contact vendors and suppliers. For a restaurant, the relationship with food distributors is not a financial abstraction. It is whether the kitchen opens tomorrow. Contact your primary suppliers directly, inform them that a financing matter is being resolved, and confirm your payment terms. A supplier who hears from you first is a supplier who continues to deliver. A supplier who hears from the funder first may not.
Invoke the Reconciliation Clause
The second action addresses the contract itself. Restaurant revenue fluctuates. The MCA agreement, if it is structured as a true purchase of future receivables, should include a reconciliation provision allowing for payment adjustments when revenue declines. Most restaurant owners do not know this clause exists, and most funders do not volunteer it. Gather your POS reports and bank statements showing the revenue decline. Submit a written reconciliation request with the documentation attached. The funder may resist. The record of your request matters regardless.
Separate Payroll From the Account the Funder Debits
The third action is operational. If your MCA payments are being debited from the same account you use for payroll, you are one failed debit away from a cascading crisis. Open a separate operating account at a different bank and direct payroll through it. This is not account closure (which triggers default provisions). It is cash management. The MCA funder’s debit authorization applies to the specific account designated in the agreement. A second account for payroll and essential expenses creates a buffer that the funder cannot reach through the existing ACH authorization.