AmiSight 7/3: The New Problem with Merchant Cash Advances

As most of you are aware, I have written extensively about my aversion to merchant cash advances.  They are so tempting and so easy to get.  And as soon as you jump on the treadmill, they are expensive and very difficult to get out of.  I described them at dinner the other night as “crack cocaine for businesses."

If you’re considering this route, proceed with extreme caution. New SBA rules prohibit lenders from refinancing Merchant Cash Advances.  I spoke to several borrowers last week who could benefit from a debt refinance, but that “one small cash advance” they took now creates a problem.

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