Events of Default: Meaning in a Merchant Cash Advance
Events of default are the list in your contract of things that let the funder treat the deal as broken and use its remedies, like making the balance due and suing. Common ones are blocking the debit, moving deposits, stacking against an anti-stacking clause and false statements. A drop in sales with a proper reconciliation request usually isn't on the list.
Where does it show up?
In a section of that name near the back of the contract, followed by a remedies section that says what the funder can do next.
Which events of default trip owners up most?
Switching bank accounts without notice, blocking a debit and taking a second advance top the list. Each of these shows on the statements the funder reads, so the default is clear fast. Ask before you do any of them.
What does it look like in practice?
A contract lists five events of default. The owner changes banks without notice, which is one of them. The remedies section makes the unpaid balance due at once plus a default fee. See what happens if you default.
Which owner question goes with this term?
What happens if I stop paying my MCA? Answers to the questions owners ask about this term, with what to ask the funder.
A term on your offer you don't recognize?
Send us the line and we'll tell you what it means. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.