You have options. That sentence is worth more than everything that follows, but the specifics matter, so we will attend to them.
The daily ACH withdrawal is the defining feature of a merchant cash advance. It is also the mechanism by which otherwise viable businesses are rendered insolvent. A debit of $265 per day, or $400, or $900, extracted from a business account before the owner has purchased inventory or met payroll, converts a revenue problem into an existential one. The MCA funder has positioned itself first in line. Everyone else, including the business itself, receives what remains.
In March of this year the weather has not changed but the collections calls have intensified. That is the season when Q4 revenue has been spent and the daily withdrawals have not adjusted to reflect it.
The Reconciliation Provision Is a Right, Not a Request
Most MCA agreements contain a reconciliation clause. The clause provides that if the merchant's revenue declines, the daily or weekly payment amount shall be adjusted downward to reflect actual receivables. This is not a courtesy extended by the funder. It is a contractual obligation, and in many jurisdictions it is the provision that determines whether the agreement constitutes a lawful purchase of receivables or an illegal loan.
Courts in New York have identified the reconciliation clause as one of three factors distinguishing a true MCA from a disguised lending transaction. In Global Energy Innovations, the court found that a meaningful reconciliation provision, one that required payment adjustments based on actual collections, supported a true-sale characterization. Conversely, in agreements where the clause was discretionary or illusory, courts recharacterized the transactions as loans subject to usury limitations.
If your agreement contains a reconciliation clause and you have experienced a decline in revenue, you possess the right to demand an adjustment. Not to request one. To demand one. The funder's refusal to reconcile may constitute a breach of the agreement and, in certain circumstances, evidence that the transaction was never a purchase of receivables at all.
Submit the reconciliation request in writing. Include three months of bank statements demonstrating the revenue decline. Retain a copy. The written record is the foundation of every subsequent legal action.
The Funder Who Refuses to Reconcile Has Abandoned the Agreement
And here is the contradiction that sits at the center of every MCA dispute. The funder classifies the transaction as a purchase of future receivables to avoid lending regulations. But when revenue declines and the merchant invokes the reconciliation provision, the funder refuses to adjust, demands the same fixed daily amount, and threatens default. The funder wants the legal benefits of a purchase agreement and the economic behavior of a loan.
One cannot occupy both positions.
When a funder refuses reconciliation and continues to extract fixed daily payments irrespective of actual revenue, the funder has functionally converted the transaction into a loan with a fixed repayment obligation. That conversion triggers usury analysis. In New York, civil usury caps interest at 16 percent per annum. Criminal usury begins at 25 percent. The effective annual percentage rates on most merchant cash advances, when the repayment period is compressed to three or four months, range from 60 percent to well over 300 percent.
The $1.065 billion Yellowstone Capital settlement demonstrated what happens when this analysis is applied at scale. Over 18,000 businesses. Rates as high as 820 percent. The entire debt portfolio cancelled.
Revocation of ACH Authorization Is Immediate
You authorized the daily ACH debits when you signed the agreement. You may revoke that authorization. Under the Electronic Fund Transfer Act and NACHA operating rules, a consumer or business account holder retains the right to revoke any ACH debit authorization by notifying the originating depository financial institution. In practice, this means contacting your bank and instructing it to block debits from the specific originator.
This is where precision matters more than courage.
Revoking ACH authorization does not eliminate the debt. It stops the bleeding.
The revocation will prevent further daily extractions from your account. It will also precipitate a response from the funder, which may include demand letters, threats of litigation, filing of a confession of judgment, or acceleration of the remaining balance. The revocation is not an end. It is a tactical reorientation, a transfer of the dispute from the automated withdrawal system to the legal system, where defenses exist and where the terms of the agreement are subject to examination.
Before revoking, one should have counsel in place. The sequence matters. Retain an attorney. Analyze the agreement. Identify the defenses. Then revoke.
Settlement Converts Destruction Into Arithmetic
73 percent of MCA disputes that involve legal counsel conclude through settlement rather than litigation. The funder prefers resolution to the risk that a court will recharacterize the agreement as a usurious loan and void it entirely. The merchant prefers resolution to the uncertainty of prolonged proceedings.
A settlement replaces the daily ACH withdrawal with a fixed monthly payment. It reduces the outstanding balance. It terminates accrual of additional fees. It provides a defined conclusion to an obligation that, under the original terms, felt indefinite.
The discount from the stated balance depends on the strength of the merchant's legal position. Where the reconciliation clause is illusory, where the confession of judgment is procedurally defective, where the effective interest rate constitutes criminal usury, the funder's exposure is substantial and the settlement reflects it. Reductions of 40 to 60 percent from the claimed balance are not theoretical. They are the ordinary result of competent representation.
But settlement requires something that distressed business owners often lack. It requires time. The daily withdrawals consume the time by consuming the capital. This is why the revocation of ACH authorization and the engagement of counsel occur together. One creates the space. The other fills it with structure.
Bankruptcy Is Available but Seldom Necessary
Chapter 11 reorganization permits a business to restructure all of its obligations, including MCA agreements, under court supervision. The automatic stay halts all collection activity. The business proposes a plan of reorganization that addresses each creditor class.
For some businesses, this is the appropriate instrument. For most, it is not. The cost of a Chapter 11 proceeding, the administrative burden, the stigma, the duration, these exceed what the situation requires when the MCA agreement itself contains the defenses that produce resolution outside of bankruptcy court. A filing made in desperation, without first examining whether the underlying agreement is enforceable, surrenders the very arguments that would have resolved the matter for less.
There are circumstances where bankruptcy is the correct answer. A business with multiple MCA obligations stacked in sequence, with personal guarantees executed on each, with confessions of judgment already filed in multiple jurisdictions. That business may need the protection of the automatic stay to preserve its existence long enough to reorganize. Even then, the analysis of each MCA agreement for enforceability should precede or accompany the filing.
The Personal Guarantee Is Not as Absolute as It Appears
Most MCA agreements include a personal guarantee executed by the business owner. The guarantee provides that if the business defaults, the individual becomes personally liable for the remaining balance. This is the provision that produces the most acute distress. The owner perceives that the business failure will become a personal financial catastrophe.
The guarantee is enforceable to the extent the underlying agreement is enforceable. Where the MCA is recharacterized as a usurious loan, the guarantee attached to it shares the same infirmity. A guarantee of an illegal obligation is not itself a lawful obligation. Where the confession of judgment is vacated, the guarantee that referenced it requires independent adjudication. Where the funder obtained the guarantee through misrepresentation of material terms, the guarantee may be voidable.
None of this means that personal guarantees are meaningless. They are real instruments with real consequences. What it means is that the analysis of the guarantee cannot be separated from the analysis of the agreement it guarantees. The defects in one may permeate the other.
New Protections Have Arrived While You Were Making Payments
Since January 2026, California Senate Bill 362 has required MCA providers to disclose annualized percentage rates on commercial financing transactions under $500,000 and prohibited deceptive use of the terms rate and interest. Since February 2026, New York's FAIR Business Practices Act has extended unfair and abusive practice prohibitions to small business transactions under GBL Section 349. Texas HB 700 has prohibited confessions of judgment and restricted ACH debits absent a first-priority perfected security interest.
These are not abstract legislative developments. They are instruments that alter the enforceability of the agreement you signed, the defenses available when you are sued, the regulatory exposure the funder carries into every collection action. An agreement executed before these statutes took effect may nonetheless be subject to their provisions where the collection activity occurs after the effective date.
The legal environment is not what it was when you signed. The obligations may not be either.
The Telephone Will Not Resolve This
Business owners who cannot afford their daily MCA payments often begin by calling the funder to explain the situation, to request forbearance, to describe the revenue decline. The call is recorded. The representations made during the call become part of the funder's file. The forbearance, if granted, is temporary and conditioned on terms that may worsen the merchant's position.
The funder's collections department is not a negotiation partner. It is an apparatus of extraction. The representatives who answer the telephone are not authorized to modify the agreement. They are authorized to secure continued payment.
An attorney's communication occupies a different register. It signals that the merchant has examined the agreement, identified its deficiencies, and is prepared to assert defenses in a legal proceeding. The funder's response to that communication differs from its response to a telephone call from a distressed owner in the same way that a conversation about price differs from a conversation about legitimacy.
We represent business owners who are confronting MCA payment obligations they cannot sustain. The consultation is where one determines whether the agreement that is causing the harm is the agreement a court would enforce.
The daily withdrawal will occur again tomorrow. The question of whether it should is already answerable.