MCA Hardship Letter: 5 Parts of a Request the Funder Can Evaluate

The hardship letter should ask for a defined change supported by records. A moving account of financial pressure can leave the funder without the figures or contractual request needed to evaluate a response.

Before sending it, distinguish a reconciliation request under the agreement from a proposal for discretionary relief. The wording should reflect the route you intend to pursue.

1. Identify the Account and Requested Action

Begin with the legal business name, account number, and agreement date. State whether you seek reconciliation, a temporary payment adjustment, or a discussion of settlement terms.

Simply writing that payments are unaffordable can obscure the action requested. If counsel has identified a contractual procedure, follow its document and delivery requirements.

In LG Funding v. United Senior Properties, a New York appellate court discussed reconciliation among the factors relevant to whether repayment was absolute. That does not establish a universal entitlement to the adjustment an owner prefers.

We would ensure the request uses the agreement's language without adopting legal conclusions the records do not support. Keep a copy of the provision with the outgoing letter.

2. Describe the Change With Verifiable Facts

Explain the period affected and the change in receipts or operating conditions. Use figures from the business's records rather than estimates selected to strengthen the appeal.

If an amount is provisional, say what it represents and when updated records will be available. The funder can evaluate a qualified figure more usefully than an unsupported assertion of certainty.

Attach the relevant statements or sales reports through the appropriate secure channel. Avoid sending unrelated personal information that the request does not require.

Resist the urge to describe the creditor's motives. A request can be firm while remaining factual, and speculation can distract from the change the documents establish.

3. Use a Template as a Structure

The following language requires replacement of the bracketed information with accurate account details. Counsel should review and analyze it where a dispute, default allegation, or legal proceeding already exists.

Re: [business name and account]. We request [specific adjustment or reconciliation] under [relevant provision, if applicable]. Receipts during [period] were [documented amount], compared with [accurate comparison period]. The attached records support this change. We propose [specific payment or requested calculation] beginning [date]. Please provide your written response and identify any additional records required to evaluate the request. This letter does not assume that the existing payment terms have changed before written confirmation.

The final sentence is extremely important. Sending a request does not necessarily modify the agreement or suspend collections. The owner needs advice before treating silence as acceptance.

Ask for a response through a channel the business can retain. A telephone discussion may be useful, but the agreed change should be documented.

There is a peculiar temptation to make a template sound more dramatic than the underlying records. Leave the records in charge of the account.

If the proposed payment depends on an expected customer receipt, describe that condition with care. Do not present money awaiting collection as funds already available. An accurate request is easier to revise than a promise the business cannot perform.

4. Track Delivery and the Response

Follow the agreement's delivery instructions. Save the sent version, attachments, and evidence of receipt.

Record any request for additional documents and the date supplied. Keep later collections in the same chronology.

The file should show the sequence.

5. Prepare for an Answer Other Than Approval

A creditor may request more information, reject the proposal, or offer different terms. An adviser should ensure the owner can assess those terms against available cash rather than accepting them because a response finally arrived.

Delancey Street offers a free confidential initial review of MCA debt concerns. Its debt settlement services can provide a starting point for examining negotiation if a hardship request does not resolve the pressure. The company is not a law firm and coordinates legal matters with independently licensed counsel; confirm eligibility and availability.

Private negotiations do not create an automatic stay or excuse a court response. Bring any formal notice to counsel while protecting and preserving the hardship correspondence.

It is extremely useful to know what a declined request establishes: the funder has answered a particular proposal on a particular record. That may support the next discussion without determining its outcome.

The letter's purpose is a decision the parties can identify. A clear request leaves the owner with a better record whether the answer arrives as agreement, qualification, or refusal.