Answers

What happens if I can't pay a merchant cash advance? A plain answer.

Contact the funder before a payment fails. Under a true holdback or revenue-based agreement, lower sales should mean lower payments, and most agreements allow a reconciliation when revenue drops. Missed payments without contact can lead to fees, default and collection action under the agreement and any personal guarantee.

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What happens if I can't pay a merchant cash advance?

Key facts

Read the reconciliation and default sections first
Ask for an adjustment in writing before the payment date
Send recent statements as evidence
A cash squeeze is different from a sales drop

First: is it a revenue problem or a cash problem?

If sales have genuinely fallen, the agreement's reconciliation clause is designed for this. Provide recent statements and ask for the payment to be adjusted to match actual receivables. If sales are fine but cash is tight because of other bills, the conversation is different: you may need to restructure other obligations or ask the funder for a temporary arrangement.

What to do

Read the reconciliation and default sections of your agreement.
Contact the funder in writing before the payment date.
Send the last one or two months of statements showing the change.
Ask for the adjustment or arrangement in writing.
Avoid taking another advance to cover this one.

If it goes to default

Default terms vary. They may include fees, acceleration of the remaining amount, enforcement of a personal guarantee and action under any general security registration. A Canadian funder generally has to go through the courts to enforce. Get legal advice early if you receive a default notice. If the business is insolvent, a Licensed Insolvency Trustee can explain options such as a proposal under the Bankruptcy and Insolvency Act.

Where Canadian files usually start

Monthly revenueTypically from around $20,000 a month in deposits for Canadian files. The exact line varies by funder and by file.

Time in businessTypically about 12 months. Newer businesses can be reviewed, but the options narrow.

Account healthLimited low-balance or negative days. Funders read the last few months of bank statements for this.

CreditScores from 500 are considered. A score of 600 or higher opens more options and better offers.

DocumentsA signed application and recent business bank statements, typically the last four months.

Existing advancesFiles with an existing advance can be reviewed, including second position.

If your question is about your own file rather than the general rule, the fastest route to a specific answer is a review. Send a signed application and your last four months of business bank statements, mention this question in a note, and the response will address it directly. You can also call (305) 384-8391 and ask before applying; there is no cost to ask.

Questions owners ask next

Sources and review

Office of the Superintendent of Bankruptcy Canada

Reviewed by the Merchant Fund Express team on October 12, 2026. Official pages checked as of that date.

Common questions

Will one slow month cause a default?

Not if you communicate and the agreement includes reconciliation.

Can the funder take my house?

Only through legal process and depending on what you guaranteed and pledged. Get legal advice.

Should I consolidate?

Consolidation can help in some cases but adds cost. Understand the total before agreeing.