I Missed an MCA Payment: What Happens Now

This is automatic. The funder's system will attempt to pull the daily debit again. Then again. Most funders will retry 2 or 3 times within the first week. Each failed attempt triggers an NSF fee from your bank (usually $25-$35 per attempt) and a returned payment fee from the lender. So one missed payment can turn into $150-$300 in fees, before anyone even picks up the phone.

And your bank is watching too. Multiple NSF hits in a short window can trigger a risk review on your account. Some banks will freeze your account or close it entirely if they see a pattern of returned ACH debits. So now you have two problems.

Within 48 to 72 hours, sometimes faster, you're going to hear from the funder's collections team. And these are not polite reminder calls. MCA collections teams are aggressive by design — they're trained to create urgency, because urgency is what gets people to pay.

You should expect calls on your business line, your personal cell, and if there's a personal guarantor on the deal (there almost certainly is), they're getting calls too. Some funders will call 5, 6, 7 times a day. Some will leave voicemails that sound like threats. Some of those threats are real, some are not — but in the moment, you can't tell the difference.

Here's where it gets worse. Some lenders will start calling your customers and vendors. They pull this information from the bank statements you provided in your application. They have the right to do this, and they will use it. The goal is to embarrass you into paying, and to start positioning themselves to intercept your receivables.

This is the part most business owners don't understand until it's happening to them. When you signed that MCA agreement, there's a clause in there — virtually every MCA has it — that says upon default, the entire remaining purchased amount becomes due immediately. Not the daily payment. Not what's left on this week's schedule. The whole thing.

So if you took a $100,000 MCA and you've paid back $40,000, you don't owe $60,000 minus today's payment. You owe $60,000, plus default fees, plus attorney fees, plus whatever penalties are buried in the agreement. That number can jump 15-25% overnight.

And the definition of "default" is broader than you think. You didn't just miss a payment — you might have also triggered default by:

Changing your bank account without telling the funder

Taking on additional financing (the stacking clause)

Switching payment processors

Having a significant drop in revenue that you didn't disclose

Any one of those is a default under most MCA agreements. The missed payment might just be the one they noticed first.

When you took the MCA, the funder filed a UCC-1 financing statement against your business. You probably signed off on it without thinking twice. At the time of default, that UCC filing becomes a weapon.

The funder will send notices to your credit card processor, your customers, your vendors — anyone who owes you money — instructing them to redirect payments directly to the funder. This is called a notice of assignment, and it is legal. They are literally telling the people who pay you, to pay them instead.

This can choke off your cash flow within days. Sometimes hours. You wake up and the money that was supposed to hit your account is going somewhere else. And you have no say in it, because you agreed to it in the contract.

If you signed your MCA in New York — or if the agreement has a New York jurisdiction clause, which many do — there's a very real chance the funder has a Confession of Judgment (COJ) attached to the deal. This is a pre-signed legal document that allows the funder to get a judgment against you, without going to court, without a hearing, without you even knowing about it.

They file the COJ, get a judgment, and then use that judgment to freeze your bank accounts. Personal and business. This can happen within 24 to 48 hours of the filing. You find out when your debit card gets declined at the gas station, or when your payroll doesn't go through.

Now — there have been legal reforms around COJs (New York amended the rules in 2019 to require more protections for out-of-state defendants), but plenty of funders still use them, and the process is still devastatingly fast if you're not prepared for it.

"I'll just explain my situation and work something out." Maybe. But the funder's incentive structure doesn't reward patience. Their collections team gets paid to recover money, not to listen to hardship stories. By the time you're ready to have a conversation, they may have already filed the COJ, sent UCC notices, and started intercepting your receivables.

"They can't really freeze my personal accounts." They can if you personally guaranteed the advance and they have a judgment. And you almost certainly personally guaranteed it.

"I'll just get another MCA to cover this one." This is stacking, and it triggers default on the original MCA. It also makes everything exponentially worse. You're not solving the problem, you're adding a second funder who now also has a UCC filing against you, and both of them are fighting over the same receivables.

Don't ignore it. That's the first thing. Every day you wait, the funder is taking steps to lock down your money, and your options are shrinking.

If you've already missed a payment, or you know you're about to, there are ways to negotiate a settlement — but the window is narrow and it matters who's doing the negotiating. Funders respond differently to a business owner calling on their own, versus an attorney-backed firm that understands MCA contract law, UCC filings, and COJ defense.

The worst thing you can do right now is nothing. The second worst thing is to panic and take on more debt to cover the first debt. Neither of those ends well, and you probably already know that.