Print Shops and Sign Companies: 6 MCA Debt Reviews With Financed Equipment

If you own a print shop, a sign company, or any other business with a lot of pricey equipment on long-term lease or purchase contracts, then in hard times you have to run six reviews. First, figure out what real dollars are in dispute, across all the disputed obligations combined. Next, pull the UCC filings, and see who claims to have what liens on the high-value assets. After that, map out who has priority on each one. Then untangle whether each contract is a real lease or just a financed sale. After that, figure out what each creditor can actually do to you if you miss a payment. Finally, check whether the MCAs are in fact MCAs or are really business loans instead. When you finish, then you can figure out how to fight or pay off the mess.

The Real Debt

If you think about your outstanding obligation as what you got (the advance minus any origination fees), and not what the MCA or loan document you signed says you owe (advance times the factor rate), you will make mistakes. So instead figure out what the contract says you have to pay and what has been withdrawn so far. Then, how much more has to be pulled? Before you take action to stop that, check the contract to see whether your missing a payment means the whole sum is now due in a lump and whether the funder has added default fees. Finally, check whether you get dinged for an automatic NSF charge each time your withdrawal was rejected due to insufficient funds.

What the funder said you had to pay back in the contract was based on the whole advance, not the part you actually got after taking out fees. If your company took a $150,000 advance and the factor rate was 1.45, that means you are on the hook for $217,500, whether it takes you seven months or fourteen to repay it. If there was $7,500 in fees, you received $142,500 cash.

What the contract says and what the funder claims do not have to match. This gap is where files are won or lost. Claims by MCAs and lenders usually include an inflated payoff figure. However, in your zeal to grab a fast settlement, you may focus only on the gap between that number and whatever you’re willing to pay. You forget the real question is the gap between the real debt, the amount you owe under your contract, and what you’re willing to pay. That error can lead to paying 95% of what a funder really was entitled to, rather than a true negotiated discount.

Uniform Commercial Code

The second review is to check UCC (Uniform Commercial Code) filings. These filings are in the public record by state, and your funders likely ran them before they approved you for stacking. So can you, and you can figure out who filed on you in what order, and what assets they claimed a lien on. A UCC filing remains effective five years from when it was filed unless there was a continuation filed. What’s filed may be different than what the MCA collector tells you on the phone.

For the third review, priority, note that under the Uniform Commercial Code, a vendor or lessor who perfects the lien on a piece of equipment within 20 days of the receipt of delivery will have first priority as to the equipment. This means that the financing company that helped you purchase that new printer or cutter is likely to get paid before the MCA lenders, even if the MCA has a UCC lien claiming all your assets. This may force a rework of your settlement strategy with those funders, and a revision of the priority in which you make settlements.

The fourth review for you should be of whether your equipment lease is really a secured sales contract instead. Notice the review point is not, “what do you call it?” It is what does the law call it, given the terms in the contract? People tend to see them as leases if they look and feel like a monthly payment stream, which is not how the law sees it. With an equipment “lease” agreement, if you cannot cancel the payments and can buy the machine at the end for a nominal amount, that document is a secured sales contract.

After you default on a printing machine, the equipment loan company may repossess without court if it does not breach the peace, or disable the printer and sell it right on your premises. During the time you keep up the regular draws, the MCA stays pretty quiet. Once the pulls bounce, though, you will get collection pressure. Then, the company may send UCC notices, which may warn third parties holding your money to redirect it instead to the MCA. Next comes a lawsuit or a Confession of Judgement. In New York, thanks to a 2019 amendment, a confession of judgment can only be filed in the county where the debtor lived when signing or lives at filing. Out-of-state businesses that have no place of business in New York are protected.

The final review point is whether your MCAs really were MCAs or instead were loans in disguise. A 2020 New York appeals court says: the measure is, does the contract have a real reconciliation provision; does it have a finite term; and does the lender retain recourse in bankruptcy. These are factual questions to check against your own contract wording. In January 2025 the New York Attorney General obtained a court judgment cancelling $534,552,724 owed by small businesses on funding agreements with Yellowstone Capital. The attorney general claimed the deals worked as loans, with rates up to 820% a year, because fixed daily amounts came out no matter what revenue was.

Pick an Exit Plan

Once you have the real picture, pick an exit plan: restructuring if the business works but the schedule doesn’t; consolidation if stacking is the problem; settlement if the balances are beyond you; payment relief if this week’s cash is the emergency.

Bankruptcy is another route. Filing a bankruptcy case triggers an automatic stay that temporarily stops any creditor who was collecting from your business from trying to seize your business property; though they can go to court and ask the judge to lift that hold. Still, before you act on the idea, sit down with a lawyer and look at the rest of your situation. Eligible subchapter V bankruptcy cases are only open to businesses with up to $3,424,000 in noncontingent, liquidated debts (a bill would raise that cap to $7.5 million). Normally the forgiveness of debt is treated as income, but it may qualify, within limits, as a tax-free cancellation of indebtedness if you are either bankrupt or insolvent when it happens, and you file a Form 982.