How Long Does MCA Settlement Take Start to Finish?

There’s no set timeline for the entire process. It usually takes a few weeks to a few months, sometimes longer. With one funder, good documents, and a willing funder, you’re looking at about 30 to 60 days. With several stacked funders or a lawsuit thrown in the mix, 3 to 6 months or longer isn’t unusual.

An MCA settlement lets you resolve your advance for a negotiated amount, paid in a lump sum or on a set schedule. Not all funders accept them and they’re not automatically approved either. They’re different from restructuring, which changes the payment amount or timing but doesn’t settle the advance.

Multiple funders, disputes over the MCA balances, lawsuits, judgments, and too little cash to settle slow it down. Once a lawsuit is filed, most cases take 6 to 12 months, sometimes longer. Many cases settle during or after discovery or the summary judgment motions. A complex case that goes to trial is 12 to 24 months or longer.

Mostly Paperwork

The first several days is mostly paperwork. You need every MCA agreement, payoff statements, 3 to 6 months of bank statements, the payment history, the P&L, and any default notices or lawsuits. Funders often want the statements, P&L and a hardship explanation before they negotiate. Explain what changed. Revenue fell in a slow season. A big customer paid late. Costs went up. Whatever it is, you have to show what the business can realistically support now, not when the advance was signed.

You’ll spend the next 1 to 3 weeks on strategy and outreach. Then look at how each MCA collects. Do they take a fixed daily ACH or a percentage of card sales? Are there any lawsuits? How old are they? Was a judgment entered? Talks with funders may begin.

A reconciliation clause in an MCA agreement may let you ask the funder to review a payment if your actual receipts are lower than you expected. Some agreements require statements and a written explanation of the slowdown. Another option to consider is restructuring your MCA.

While You Negotiate

A settlement discussion does not stop ACH withdrawals by itself. Daily MCA payments will usually keep coming out while you negotiate. The same for weekly payments. You usually need the funder’s permission to change the payments. While you negotiate, you may be able to reduce the payment amount, change the frequency, or get a temporary plan. The goal is to keep enough operating cash to run the business.

It is not uncommon to want to consider blocking ACH to keep cash coming in or closing the bank account for the same reason. Both tactics can bring added fees, maybe a lawsuit, and may subject you to account restrictions. This is why it is important to consult with an attorney before changing payment instructions. If you’re already facing a lawsuit, judgment, frozen account, or collection notice, you may want to talk with a lawyer.

The negotiation itself usually takes several weeks to a few months. A funder wants to know what it can actually recover, and how soon. That comes down to your income and ability to make a lump sum settlement, or whether you can make a realistic installment agreement. There’s no universal settlement percentage because one case is different from another. Leverage in MCA negotiation is not about aggressive talk. It’s about having the documents to explain what you’re doing. It’s about a realistic hardship and payment plan based on actual numbers.

You can work out an MCA settlement alone, or with an independent negotiator or an attorney. Negotiations center on the total amount, the time for you to settle, and how and when you pay. This includes the first and last payment dates, fees, ACH or other payment methods, and what happens to guarantees and UCC filings.

If you owe more than one funder, keep in mind that what you give one funder affects what is left for the rest. Review the whole debt picture before accepting any single offer. Verbal promises made on the phone are not final until they are written and signed.

The Written Settlement Agreement

Once you agree on terms, it can be several business days or longer for the written settlement agreement to be prepared, reviewed, signed and returned. The settlement agreement should say the remaining balance is released, any ACH withdrawals stop, UCC filings are terminated, the personal guarantee is released and any lawsuit dismissed. Read the settlement agreement before you sign it. Make sure the repayment terms are ones you can keep to. Making the lower payment is not an automatic settlement unless the agreement says so. Legal review may be appropriate.

Installment agreements can last 12 to 18 months. There is no end date until the last payment clears and all the agreement’s conditions are met.

When your last MCA payment clears, keep the signed agreement, the payment confirmations, and the notice of closure. Keep track of the UCC termination or court dismissal notice. Be sure they actually happened. And ask a tax professional about forgiven debt and taxable income. Generally, the IRS treats forgiven business debt as taxable income in the year it is cancelled. The rules don’t count it as taxable income if you’re in bankruptcy, insolvent, or qualified for another exclusion.

Each case is different and no one can promise an exact timeline. A review may be worth the time if withdrawals are no longer sustainable, revenue has fallen, or several funders are taking payments.