Should you stop paying your MCA? Usually not, but if you've paid off the balance, your funder is taking more than the contract allows, or it's ignoring your request to reconcile, then you should revoke ACH authorization on your MCA. Give the funder written notice with an alternate means of paying, and tell your bank separately.
Lots of pages online tell you that you have a legal right to stop paying your MCA and only need to tell your bank. That's mostly baloney. The federal regulation letting you revoke a preauthorized debit on three business days notice, 12 CFR § 1005.10(c), covers only accounts "established primarily for personal, family, or household purposes." What governs your MCA is the contract you signed.
When should you revoke ACH authorization on your MCA?
Revoke ACH authorization on your MCA if you have paid it off. Under Cedar Advance's standard agreement filed with the U.S. Securities and Exchange Commission, the authorization lasts only until the purchased amount is paid in full, and the FTC alleged that Yellowstone Capital kept withdrawing hundreds and sometimes thousands of dollars for days after customers had repaid in full.
Also consider revoking if your funder is taking more than the contract allows. New York appellate courts have let claims proceed against Richmond Capital Group for withdrawing unauthorized amounts and debiting on holidays (Davis v Richmond Capital Group; People v Richmond Capital Group). Stop the excess, but keep paying what you owe under the contract if you can.
Revoke, too, if your funder refuses to reconcile. Cedar's agreement promises reconciliation within two business days of proper notice, with debits paused meanwhile. In Apollo Funding v Dave Reilly Construction, the merchant paid $14,240 of the $37,750 it owed, stopped, never invoked the reconciliation clause, and lost on summary judgment, so request a reconciliation in writing first. In Texas, Section 398.056 of the Texas Finance Code prohibits automatic debits unless the funder has a first priority perfected security interest in the account.
Finally, consider revoking if you are closing your business or filing for bankruptcy.
When should you not revoke ACH authorization on your MCA?
Don't revoke until you've read your contract for a confession of judgment or personal guaranty, a cross-default clause, and any ban on changing banks. In Oakshire Properties v Argus Capital Funding, Argus refused to reduce its debits and two days later filed a confession of judgment, and CPLR 3218 still allows that against a merchant who resides in New York.
In Apollo Funding, the owner's guaranty covered performance of the merchant's representations, warranties, and covenants, so the stop reached him personally; in EBF Holdings v Defiant Arms, the guarantor prevailed because the guaranty covered only the obligations the contract defined. With multiple funders, be careful: under Section 30(4) of Cedar's agreement, stopping another creditor's debits without explaining why to Cedar in writing within two business days is a default.
Don't move your deposits to a different bank either. Section 23 of Cedar's agreement prohibits it without Cedar's written consent, and in Spin Capital v Bridgelink the Appellate Division affirmed an $8,234,160.50 judgment against a merchant whose debits were rejected for insufficient funds and a closed account. If you're thinking of stopping to force a settlement, read Should I stop paying my MCA to force a settlement?
What should an MCA ACH revocation letter say?
To revoke without putting your business in default, clearly revoke the ACH and offer an alternative method of payment. Some agreements have a clause like section 30(2) of Cedar's, which treats a blocked debit as a default only if you gave no advance written notice with an alternative method for payment. Include:
- Your business's legal name, DBA, address, and authorized signer.
- The funder's legal name as it appears on the agreement and on your bank statement.
- The date and number of each funding agreement, listed separately.
- Your bank's name, routing number, and the last four digits of the debited account.
- A statement that, effective on a stated future date, you revoke the ACH authorization in section [x] for the funder, its payment processors, agents, or assigns.
- Your reason, if any: paid in full, overcollection (what you paid versus what it collected), or a reconciliation requested on a stated date and not completed.
- An alternative payment, such as a weekly ACH credit or wire of the reconciled amount, with the first payment date.
- A request for written confirmation, a ledger of all ACH debits, the remaining balance, and copies of the signed ACH authorization and any UCC-1.
- A sentence stating you don't dispute that you authorized the debits.
Send it by every method the notice section of your agreement permits; Cedar's lists certified mail, overnight delivery, email, and text message. See our article on the five letters you need to send your funder before you stop making payments.
What do you tell your bank?
Ask your bank in writing for a stop payment or ACH block on the originator's name as it appears on your statement, with the amount or range and the effective date, and request written confirmation, the fee, and the expiration date. Under Section 4-403 of the Uniform Commercial Code, a written stop payment order lasts six months and an oral one fourteen days. Say you are revoking your authorization, not that the debits are unauthorized, because under agreements like Cedar's section 30(1) an intentionally false representation is a default. See our article on what happens if you stop paying your MCA for a day-by-day timeline.
Frequently Asked Questions
Does the funding company have to stop debiting my account if I send them an ACH revocation letter?
No. You'll need to ask your bank separately for a stop payment or ACH block on the funding company's name as it appears on your bank statement.
Will revoking my ACH authorization put my business in default?
It depends. Under some funding agreements, such as Cedar Advance's, you won't be in default if you give advance written notice and an alternative method for payment; under others, intentionally interfering with the funder's method of collection is a default.
Can I revoke the ACH authorization for one funding company if I have multiple funding companies debiting my account?
You can, but read all of your contracts first, since some put your business in default if you stop one creditor's ACH debit without a written explanation within two business days.
My business is in Texas. Can a funding company debit my account automatically?
Not since September 1, 2025, unless it has a first priority perfected security interest in that account, under Section 398.056 of the Texas Finance Code. There is no private right of action, so the state enforces it, and the funding contract may still be enforceable.