MCA Restructuring: 6 Requests a Funder May Grant Without a Settlement

A funder that will not discount a balance will often still move the payment, and the difference between those two concessions is the whole subject of MCA restructuring. A settlement changes what is owed. A restructuring changes how and when it is collected, and because it asks the funder to give up less, it is the request a funder can grant on an ordinary afternoon without a manager's signature on a write-off.

Six requests fall into that category. Each succeeds or fails on the paper that comes with it.

1. Reconciliation Under the Contract You Already Signed

The first request is the one the agreement itself invites. The agreements quoted in New York appellate opinions describe the daily remittance as a good faith estimate of a share of receipts, and several include a clause allowing that estimate to be adjusted to actual revenue. In Bridge Funding Cap LLC v. SimonExpress Pizza, LLC, decided by the Fourth Department in July 2025, the majority described two reconciliation provisions under which the daily remittance "would be modified both retroactively and prospectively upon request and with proof of earned revenue," and found them genuine because they did not leave adjustment to the funder's sole discretion. The Second Department, in the 2020 LG Funding case, saw a clause letting the funder adjust payments "at [its] sole discretion" and treated it very differently.

The practical lesson sits in that phrase "with proof." A reconciliation request is a document request in reverse: the merchant supplies bank statements and, where the contract asks, processor or sales reports for the period in question, measured against the specified percentage the agreement names. The request should cite the clause by number, attach the records it requires, and state the adjusted figure the arithmetic produces. A request that says only "business is slow" gives the funder nothing to reconcile.

Reconciliation also runs backward in some contracts, and a retroactive adjustment for months when debits exceeded the agreed share is a credit the merchant has already earned. It is worth asking for by name.

2. A Lower Daily Figure, Negotiated Rather Than Reconciled

Where the contract has no workable reconciliation clause, or the merchant wants a reduction beyond what the percentage supports, the request becomes a modification. The funder is being asked to accept less each day in exchange for a longer collection period, which costs it time and not principal. Supply a thirteen week cash forecast, identify the payment the business can carry through a weak week, and propose that figure; a request pitched at the level of a good week invites a second default.

The modification should be written. An email saying "we can do $400 a day for now" is a courtesy, and courtesies are withdrawn.

3. Weekly Instead of Daily

A switch from daily to weekly debits changes nothing about the total and a great deal about the bank account. Payroll, rent, and supplier terms run weekly or monthly; a debit that lands every business day consumes cash before the business knows what the week will bring.

In Texas the debit mechanism is itself regulated for covered commercial sales-based financing: rules adopted in July 2026 under the state's 2025 statute explain that automatic deposit account debits require a perfected, first-priority interest in the recipient's accounts receivable. Elsewhere, frequency is a matter of contract.

4. A Short Forbearance With a Defined End

A forbearance asks the funder to accept reduced or suspended payments for a fixed window, tied to a documented event: a lost contract, a seasonal trough, a physical closure. The paper that supports it is evidence that the event occurred and a projection of when receipts return.

Read the forbearance letter for what it says happens on the last day. A letter that restores the original schedule at once, or adds the deferred amounts to it, can leave the business facing a larger debit in the month after its worst month, a structure about as merciful as a dentist who schedules the second extraction for the day the first one stops hurting.

5. A Longer Term, Stated as a Number of Payments

Term extension is the arithmetic partner of a lower payment, and it needs its own clause. The amendment should state the remaining balance, the new payment, the number of payments, and the date the last one falls due. That precision matters for a reason beyond budgeting.

Courts deciding whether an advance is a true purchase of receivables look at whether repayment is absolute, and New York decisions weigh three factors: whether the agreement has a reconciliation provision, whether it has a finite term, and whether the funder has recourse if the merchant files for bankruptcy. An amendment that fixes a payment amount and a final date, and drops reconciliation, moves the paper toward the features of a loan. Whether that helps or hurts a given merchant depends on the rest of the file and on the state whose law governs it (a funder's counsel will insist the amendment changes nothing about the original character of the deal, which is a position, not a ruling). Counsel should read the amendment before it is signed, not after.

There is one further consequence worth knowing. Under the SBA's lender manual effective October 1, 2026, an MCA becomes a candidate for 7(a) refinancing only after it has been converted to a term loan and paid on that basis for at least two years without new advances. A conversion is the start of that clock.

6. A Narrower Guaranty

This is the hardest of the six, and the most valuable. The guaranties described in LG Funding and Bridge Funding were guaranties of the merchant's performance of its representations and covenants, and a trial court in a later New York enforcement case noted a guaranty framed as one of performance and not of payment. The distinction has a long history in commercial law; the Uniform Commercial Code, in section 3-419, separates a guaranty of payment, enforceable without first pursuing the principal debtor, from a guaranty of collection, enforceable only after collection from that debtor has failed.

An owner restructuring the business's obligation can ask that the amended agreement confirm the guaranty remains limited to performance, that it will be released when the restructured schedule is completed, or that it will not be enforced while the business remains current under the amendment. A funder may refuse all three.

You ask anyway, because the only guaranty that never gets narrowed is the one nobody asked about.

Where a Restructuring Stops Being Enough

Restructuring works when the business can carry some version of the debt. When it cannot, the conversation becomes a settlement, and that is the work Delancey Street does, as a negotiator of MCA debt that is not a law firm and that brings independently licensed counsel into matters needing a lawyer. Its review of an owner's contracts and bank activity costs nothing, and it also runs what it calls a pre-default reconciliation program; details are at delanceystreet.com.

The funder that moves the payment has not forgiven anything. It has decided that a slower stream is worth more than a lawsuit, and that judgment can change.