June 8, 2026 – By Christian Smith, Berkshire Financial Services
When cash flow gets tight, many small business owners look for fast funding options. One option that has become increasingly common is the Merchant Cash Advance, or MCA.
MCAs can provide quick access to capital, often with a simpler approval process than traditional financing. However, a recent report from Restaurant Dive highlights how some businesses that rely on MCA funding later face significant financial pressure from repayment obligations.
What Is a Merchant Cash Advance?
A Merchant Cash Advance is generally structured as the purchase of a portion of a business’s future receivables rather than a traditional loan.
In a typical arrangement, a funding company provides a lump sum payment in exchange for a percentage of future business revenue. Repayment is often collected through automatic daily or weekly withdrawals tied to business deposits or receivables.
According to Restaurant Dive, MCA providers frequently offer a faster approval process than traditional lenders, making them attractive to businesses that need immediate access to working capital.
Why Some Businesses Struggle With MCA Repayments
The Restaurant Dive report notes that business owners may encounter challenges when repayment obligations begin to affect day-to-day cash flow.
Because payments are often collected frequently, businesses may have less cash available for operating expenses such as payroll, inventory, rent, utilities, and other ongoing costs.
This can become especially difficult during periods of slower sales, rising expenses, or other financial challenges. In some cases, businesses seek additional financing to address cash-flow shortages, which may increase financial pressure over time.
MCA Debt and Financial Distress
The Restaurant Dive article points to several examples of businesses that reported MCA obligations as part of broader financial difficulties.
One large Subway franchise operator cited MCA debt among the factors contributing to its financial problems before filing for bankruptcy protection in February 2026. The article also reported that a Del Taco franchise operator sought Chapter 11 protection after facing significant financial challenges, including obligations related to MCA financing.
While every situation is different, these cases illustrate how repayment obligations can become difficult to manage when business performance declines.
Questions Business Owners Should Consider
Before entering into an MCA agreement, business owners should carefully review the terms and understand how the arrangement may affect future cash flow.
Important questions may include:
- – What is the total amount that will be repaid?
- – How frequently will payments be collected?
- – How could the payments affect operating cash flow?
- – What happens if business revenue declines?
- – Are there provisions that allow payment adjustments under certain circumstances?
Understanding the terms of any financing agreement is an important step before accepting funds.
Exploring Available Options
Businesses experiencing financial stress often benefit from reviewing their financial position before taking on additional obligations.
Depending on the circumstances, some business owners may explore options such as operational changes, refinancing opportunities, negotiated resolutions, restructuring efforts, or other financial strategies designed to improve cash flow.
The appropriate solution depends on the specific facts of each situation, including the business’s revenue, expenses, contractual obligations, and long-term goals.
What This Means for Your Contract
Merchant Cash Advances can provide quick access to capital when traditional financing may not be available. However, business owners should carefully review the repayment terms and understand how those obligations may affect future cash flow.
If your business is struggling with MCA payments, it may be worthwhile to review your agreements and evaluate the options that may be available based on your specific circumstances.
To speak with a Berkshire Financial Services Finance Manager about your file, call 1-800-801-1019. Informational purposes only. Not legal advice. Berkshire Financial Services is not a law firm. Results vary.