Welcome to Delancey Street. If you're reading this, you're probably already behind on your MCA payments — or you're about to be. And you're wondering if there's a way to hit pause before everything spirals. There is. It's called a forbearance agreement. But getting one isn't as simple as calling your funder and asking nicely.

What Is a Forbearance on an MCA?

A forbearance is not a settlement. It's not debt forgiveness. It's a pause. The funder agrees to temporarily stop or reduce the daily ACH debits from your bank account, usually for 30 to 90 days, in exchange for certain conditions. Those conditions vary from funder to funder, but they almost always include some kind of good-faith payment — a lump sum upfront, a reduced weekly payment, something that shows you're not just trying to disappear.

Think of it this way — a settlement is the endgame. A forbearance is what keeps you alive long enough to get there.

Why Would an MCA Funder Agree to a Forbearance?

This is the part most business owners get wrong. You assume the funder holds all the cards. They don't. Not entirely.

Here's what the funder is actually thinking: collection is expensive. Filing a lawsuit costs money. Enforcing a confession of judgment (in states where that's still allowed) costs money. Sending a case to outside counsel costs money. And even if they win, they still have to collect — which means garnishing receivables, chasing down assets, and dealing with a business owner who may have nothing left to take.

A forbearance, from the funder's perspective, is the cheaper option. They'd rather get paid slowly than spend $15,000 on litigation and recover nothing. That's your leverage. But you have to know how to use it.

When to Ask for a Forbearance

Timing matters more than most people realize. You don't want to ask too early — if you're current on payments and the funder has no reason to worry, they'll say no. You don't want to ask too late — if you've already defaulted, blocked the ACH, and the funder has already filed suit, you've lost most of your negotiating position.

The best window is when you're struggling but still paying. When the funder can see the NSFs starting to stack up, when your balance is dipping, when the daily debits are bouncing once or twice a week. That's the moment where the funder knows something is wrong but hasn't escalated yet. That's your window.

If you've already defaulted — you can still negotiate a forbearance, but your leverage is different. You're negotiating from a weaker position, and the funder knows it. More on that below.

How to Actually Negotiate a Forbearance

This is where business owners hurt themselves. They call the funder directly, explain that business is slow, and ask for a break. The funder's collections team says "sure, we understand" — and then offers terms that are barely different from what you're already paying. Or worse, they get you to sign something that actually makes your situation harder to get out of.

Here's what a real forbearance negotiation looks like:

  • You don't call the funder yourself. You have an attorney or a qualified debt specialist make the call. The funder treats that conversation differently. An attorney on the line signals that you're serious, that you understand your rights, and that you're not going to roll over. The tone of the negotiation changes immediately.
  • You present a financial picture, not just a sob story. The funder doesn't care that business is slow. They care about numbers. You need to show bank statements, revenue trends, a clear picture of what you can actually afford to pay. The more specific you are, the more credible the ask becomes. "I can't pay" gets you nowhere. "I can pay $400 a week for the next 60 days while my receivables catch up" — that's a conversation.
  • You negotiate the terms, not just the payment reduction. A forbearance agreement isn't just about lowering the daily debit. You need to negotiate: the length of the forbearance period, whether additional fees or interest accrue during the forbearance, what happens if you miss a payment during the forbearance (does the full balance accelerate?), and whether the forbearance shows up as a default on your UCC filings. Most business owners only negotiate the payment amount. That's a mistake. The terms around the payment are where the traps are.
  • You get everything in writing before you make a single payment. Verbal agreements with MCA funders are worth nothing. Less than nothing — because the funder's internal notes will say something different from what they told you on the phone. Every term, every condition, every dollar amount goes into a signed forbearance agreement before any money changes hands. No exceptions.

What a Typical Forbearance Agreement Looks Like

Every deal is different, but here's a realistic example so you know what you're working with:

You owe $85,000 on an MCA. Your daily ACH is $850. You've had 4 NSFs in the last two weeks and your bank account is averaging under $2,000. You're about to go into full default.

A forbearance agreement in this situation might look like: $2,500 good-faith payment upfront, daily ACH reduced to $300 for 60 days, no additional default fees assessed during the forbearance period, and at the end of 60 days, both parties reassess — either you return to regular payments, negotiate a settlement, or restructure.

That's not charity from the funder. That's a business decision. They'd rather collect $20,500 over the next two months than spend $15,000 on a lawsuit that takes six months and might recover less.

The Mistakes That Kill Forbearance Negotiations

Most failed forbearance attempts fail for the same reasons. Every time.

Waiting too long. If the funder has already filed a lawsuit, sent the case to outside counsel, or obtained a judgment — your forbearance window is mostly closed. You can still negotiate, but you're negotiating a settlement at that point, not a pause. The further into enforcement the funder gets, the less incentive they have to stop.

Negotiating with the collections team instead of decision-makers. The person calling you about your missed payment doesn't have authority to restructure your deal. They're incentivized to collect, not negotiate. You need to be talking to a manager, a principal, or someone in the funder's legal department. And you need a representative — not your own voice on the line — to get routed there.

Agreeing to terms that set you up to fail. Some funders will offer a "forbearance" that reduces your daily payment by $100 for two weeks. That's not a forbearance. That's a cosmetic adjustment designed to restart the clock on your default while changing nothing about your actual financial situation. If the terms don't give you real breathing room, they're not worth signing.

Not reading the acceleration clause. This is the big one. Many forbearance agreements include a clause that says if you miss even one payment during the forbearance period, the entire remaining balance accelerates immediately — plus default fees, plus attorney fees. You need to know exactly what triggers acceleration before you sign. One missed payment during a forbearance can put you in a worse position than you were in before you asked for help.

Can You Negotiate a Forbearance After You've Already Defaulted?

Yes. But it's harder, and the terms will be worse.

Once you've defaulted, the funder has already started the enforcement machine. They've probably re-run the ACH multiple times (generating NSF fees), sent your file to collections or outside counsel, and possibly filed UCC lien notices or started legal proceedings. All of that costs them money — and they're going to want that money back on top of what you already owe.

A post-default forbearance is still possible if you can show the funder that enforcement will cost them more than working with you. That means having an attorney engage on your behalf, presenting a realistic repayment plan, and — critically — demonstrating that you have revenue coming in. A funder won't pause enforcement on a business they think is dead. They'll pause on one that's struggling but recoverable.

Should You Negotiate a Forbearance or Go Straight to Settlement?

This depends on your situation, and anyone who gives you a one-size-fits-all answer is selling you something.

Forbearance makes sense when: your business is temporarily cash-strapped but fundamentally viable, you have receivables coming in over the next 30 to 90 days that will stabilize you, and you can realistically resume payments (or negotiate a settlement) after the pause.

Settlement makes sense when: you're underwater with no realistic path to resuming full payments, you have multiple MCAs stacked and the total debt exceeds what your business can service, or you've already defaulted and the funder has started enforcement.

In many cases, the smartest move is a forbearance first — to stop the bleeding — followed by a settlement negotiation once you've stabilized enough to know what you can actually afford. The forbearance buys you the time to negotiate from a position that isn't desperation.

What Delancey Street Does Differently

Most business owners who call us are already in trouble. The daily debits are bouncing, the funder is calling, and they're two bad weeks from losing control entirely. We've negotiated forbearance agreements with virtually every major MCA funder in the market — and we know which ones will negotiate in good faith and which ones won't.

We're attorney-owned. That changes the conversation with funders from day one. When our team calls, the funder knows this isn't a business owner winging it on a phone call. It's a structured negotiation with legal backing. And that distinction — between you calling alone versus having representation — is often the difference between a real forbearance and a runaround.