Answers
It depends on why it closes and what the agreement says. If revenue genuinely ends because the business failed despite good-faith efforts, a merchant cash advance structured as a purchase of receivables is different from a loan, but closing without notice, moving revenue elsewhere or misrepresenting facts can trigger a personal guarantee. Talk to the funder and get legal or insolvency advice.
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It depends on why it closes and what the agreement says. If revenue genuinely ends because the business failed despite good-faith efforts, a merchant cash advance structured as a purchase of receivables is different from a loan, but closing without notice, moving revenue elsewhere or misrepresenting facts can trigger a personal guarantee. Talk to the funder and get legal or insolvency advice.
Key facts
Related: Business Funding Answers for Canadian Owners · Business Funding Requirements in Canada · What Business Funding Costs in Canada, Compared · Documents Needed for Business Funding in Canada · Merchant Cash Advance Canada: How It Works and Costs
Many merchant cash advance agreements distinguish between a business that stops earning despite operating honestly and a business that breaches the agreement, for example by diverting receivables to a new account, selling assets without notice or closing to avoid payments. The first is a business risk the funder priced in; the second is usually covered by the personal guarantee. Wording varies, so read yours.
Corporate insolvency in Canada is handled under the Bankruptcy and Insolvency Act or, for larger companies, the Companies' Creditors Arrangement Act. A Licensed Insolvency Trustee can explain proposals and bankruptcy options for the business and for you personally if guarantees are involved.
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.
Reviewed by the Merchant Fund Express team on October 12, 2026. Official pages checked as of that date.
Possibly, under the guarantee, depending on its terms and what happened. Get legal advice.
Discuss with the funder and an advisor; stopping without contact makes things worse.
Yes, but moving the old business's revenue into a new one can breach the agreement.
Educational information only. It is not legal, tax or accounting advice.
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