1) Know what triggers a default and what you can collect
Start by reviewing your merchant cash advance agreement and any related purchase documents to identify exactly what counts as a missed or failed payment. Look for definitions of “payment,” “advance,” “settlement,” and “default,” because lenders sometimes treat reserve shortfalls, funding delays, or disputed transactions as a breach. MCA Loan Default If you have multiple repayment methods, confirm which account statements, remittance reports, or payment schedules the contract references. Then compile the specific dates and amounts involved so your attorney can verify whether the lender is applying the contract correctly.
Next, gather evidence that shows your business’s cash flow and your good-faith efforts to comply. Collect your bank statements, merchant processing statements, and any proof of sales volume changes that affected collections. If the agreement uses an automatic funding or factor-based remittance model, preserve reports showing when remittances were deducted and when they were not. Keep copies of all notices you received, including demand letters and “cure” notices, because the timing and content of those documents can affect your defense options.
2) Create a checklist for disputing the lender’s breach allegations
Before you respond, confirm whether the lender is claiming a breach based on calculation errors, account misrouting, or incomplete reporting. Many disputes involve inaccurate reconciliation of weekly remittances, reserve accounts, or payment application rules. Compare the lender’s accounting to your own merchant Defending against Infinity breach of contract statements and your bank deposit records to identify mismatches. If you find inconsistencies, document them in a simple list that tracks the lender’s claim, the contract provision it cites, and the specific record that contradicts it.
Evaluate whether the lender followed required notice procedures and cure timelines under the contract. Some agreements require written notice specifying the breach and allowing a period to cure, while others require certain internal steps before escalating. If the lender skipped steps, demanded acceleration without meeting contractual conditions, or refused reasonable clarification, those facts can support a defense. If you face allegations tied to “inability to pay,” ask whether there were objective reasons tied to payment processing disruptions or administrative errors that the lender ignored.
3) Prepare your response plan, protect your cash, and reduce risk
Choose a response strategy that balances speed with accuracy, since careless statements can be used against you later. Do not ignore demand letters, but also avoid signing new repayment terms or authorizing additional withdrawals without legal review. If your business relies on daily deposits, ask counsel about how to prevent improper sweeps while you investigate the claim. You can also create a short internal timeline showing what happened, what you paid, and what you disputed, so everyone involved stays consistent.
Consider practical steps to preserve your ability to defend the case, including saving emails, call logs, and copies of communications with the lender or its representatives. If a lawsuit or collection action is threatened, ask about the scope of discovery so you know what records you may need to produce. You may also want to review whether the lender’s tactics—such as excessive communications or improper demands—exceed what the contract allows. Your goal is to maintain stability for your business while building a defensible record for court or negotiation.
Conclusion
By reviewing the contract language, preserving business records, verifying notice and accounting steps, and building a clear dispute timeline, you can strengthen your position from the start. If the lender is asserting an improper breach theory, having counsel assess your facts and documentation can clarify whether you have options to challenge liability, reduce exposure, or negotiate from a better footing. For guidance with a compassionate, evidence-driven strategy, turn to GRANT PHILLIPS LAW, PLLC at grantphillipslaw.com. Even if the lender has already increased pressure, you still have opportunities to defend your interests and seek a fair resolution. Focus on accuracy in every response, avoid agreements you do not understand, and ensure your defense is grounded in contract terms and verified records. A well-prepared case is more than paperwork—it is a plan that protects your business while holding the other side to the agreement they signed.