Concerned About Defaulting on an MCA

What 'default' typically means in an MCA agreement

MCA agreements usually list 'events of default' — such as blocking debits, changing bank accounts without notice, selling the business, or failing to deliver receivables as agreed. A default can allow the funder to demand the full remaining purchased amount, add fees, and pursue remedies described in the contract, including against any guarantor.

Because many MCAs are structured as a purchase of future receivables rather than loans, a genuine downturn in sales may be treated differently than a refusal to pay. How that distinction applies depends on contract language and state law.

Steps to take before a default

• Read every agreement's default, reconciliation, and guarantee sections.
• Document revenue changes — reconciliation requests often require bank statements.
• Run your numbers: total withdrawals vs. revenue and expenses.
• Explore options before payments stop, not after.