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Education

For starters, MCA organizations need
to be sure they aren’t receiving mon-
ey as payment for their MCA packag-
es that they are not actually entitled
to. This could up a world of litigation The following resources were consulted for this article:
that could devastate MCA compa-
nies. And it's why a lot of savvy or- • https://debanked.com/2020/06/impact-of-covid-19-on-the-mer-
ganizations are already suspending chant-cash-advance-market/
ACH payments from companies that
have no revenue coming in—just to • https://www.troutman.com/insights/merchant-cash-advance-
guarantee that this doesn’t happen in participations-and-the-federal-securities-laws.html
error. • https://www.jdsupra.com/legalnews/covid-19-and-mca-transac-
tions-emergency-71980/
Ensuring they do not money they're
not entitled to is also not a bad idea • https://www.kake.com/story/42004498/covid-19-upends-small-
for MCA companies entering into business-owners-national-credit-partners-can-help
new loan agreements with companies
that have been negatively impacted • https://www.opportunityfund.org/the-ugly-truth-about-mer-
by the COVID 19 pandemic (which chant-cash-advances/
is pretty much every company out
there)—particularly if these compa-
nies are seeking assistance from state
or federal organizations and relief
packages.
Clearly, you don’t want to take money
gained from a relief fund, count it as
business revenue from the compa-
nies you have financed, and then find
yourself in a world of legal hurt sim-
ply because your contract states that
you will only receive payment from
the accounts receivables that you pur-
chased. We are already in enough hot
water as far as our business landscape
is concerned when dealing with the
coronavirus pandemic.

The last thing you want to do is bring
down a lot of regulatory scrutiny in
this current landscape, inviting leg-
islation or litigation that could do
even more damage than COVID has
already.

Press the pause button on servicing
your MCA contracts whenever pru-
dent right now. Wait until the waters
clear a little bit before cautiously and
strategically moving forward.

Chad Otar is CEO of Lending Valley Inc. For
information about the company, please visit
www.lendingvalley.com. To reach Chad, send
an email to chad@lendingvalley.com.

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