How to Protect Your Business Bank Accounts from MCA Drafts
When daily or weekly MCA withdrawals begin to overwhelm your cash flow, one of the first questions business owners ask is, “How do I protect my operating accounts?”
It’s a fair question, and one that deserves a careful, strategic answer.
Understanding How MCA Drafts Work
Most merchant cash advance agreements include an ACH authorization allowing the funder to withdraw payments directly from your business bank account. These withdrawals often occur automatically, regardless of sales fluctuations or upcoming payroll.
Because MCAs are structured as “purchases of future receivables,” they typically fall outside traditional loan regulations — which means banks may not stop withdrawals without your direction.
The Risks of Ignoring the Problem
If your account begins to overdraw:
Your bank may freeze the account after repeated insufficient funds.
MCA funders could treat the overdraft as a “default” and accelerate collection.
Other automatic payments (payroll, rent, vendors, etc. ) could bounce, amplifying financial strain.
Protective Steps to Consider
Create a separate operating account. Keep essential business deposits (payroll, vendor payments) separate from the account tied to the MCA drafts.
Review your ACH authorizations. You may have signed multiple authorizations across different funders — it’s important to identify and track each one.
Document everything. Maintain a record of communications, payment history, and any default notices. These documents are crucial for negotiation.
Avoid “ghosting.” Simply closing accounts without a plan can escalate the issue. Strategic communication through counsel often achieves better outcomes.
Davenport Law is Here to Help
We routinely assist clients in restructuring MCA obligations while minimizing disruption to their business operations. By analyzing your agreements, communicating directly with funders, and managing the timeline of financial transitions, we help you regain control without unnecessary risk.
Key takeaway
Managing MCA pressure starts with understanding your rights and creating a plan, not panic moves. With proper structure, it’s possible to protect your accounts and stabilize your business.
Worried about daily drafts draining your account?
Simply hit the “Contact” button at the top of this page to schedule a review with Davenport Law to understand your options and plan a path forward.
