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02-09-2024, 04:10 PM #1
- Join Date
- Apr 2020
- Posts
- 191
On one end, MCA Funders should unequivocally abide by the reconciliation clauses. On the other end, a funder has the right to deny funding for any reason, including the fact that the payments were lowered, even if it does not constitute an event of default. This stance is justified for a couple of reasons. Firstly, if the merchant decides to invoke the reconciliation provisions, they are likely experiencing difficulties in maintaining payments as it is. Therefore, why would a funder want to support a deal that is already facing issues? Secondly, which aligns with the first point, if the payments were reduced in accordance with revenue fluctuations, it indicates that the business is on a downward trend, which is also not attractive. Funders are under no obligation to provide additional funding, regardless of the assertions made by the lawsuits you are citing.
Also, in my opinion, funders should take note that you are teaching merchants to contest funder decisions by citing lawsuits, which you may deem justified, but could deter partnerships due to the potential for headaches. The conclusions you appear to be reaching, and if communicated to merchants, are likely to result in problematic merchants. There are ways to inform merchants of their rights without referencing such contentious instances. But that's just my opinion.Last edited by FlexibleCapitalSolutions; 02-09-2024 at 04:18 PM.
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