Merchant Cash Advance Attorney

Merchant loans, specifically merchant cash advances (MCAs), are short-term financing solutions provided to businesses that need immediate funds. These advances are typically repaid through a fixed percentage of your daily or weekly credit card sales. Business owners often turn to merchant cash advance lenders for quick capital to cover urgent expenses, expand operations, or navigate cash flow challenges. However, while MCAs offer rapid access to cash, the debt from these advances can quickly accumulate, often leading to overwhelming repayment terms.

Many entrepreneurs find themselves trapped in a cycle where the constant pressure of daily or weekly payments leaves little room for breathing. The upfront ease of obtaining an MCA can mask the long-term financial burden it imposes. As experienced merchant cash advance attorneys at McCarthy Law, we know firsthand how this type of debt can sneak up on you, making your initial financial relief a future financial strain. We look to help you understand your options and provide a pathway to MCA debt relief.

Merchant Loan Debt Simplified

We negotiate merchant services debt! If you’ve found yourself in a situation where your debt is unsustainable or a burden, we may be able to help! It won’t cost anything to visit with us and learn about your options.

Merchant cash advances may seem like a financial lifeline for small business owners, but these loans come with a high cost.

Merchant cash advances are a quick and easy way for small businesses to obtain funds. However, they have high interest rates and unsustainable repayment schedules. Research further shows that the annual percentage rate (APR) for most of these advances is between 40% and 350%. This can be a debt trap for many small business owners.

How Long Do I Have to Pay Back the Advance?

The repayment period for a typical merchant cash advance varies and depends largely on the agreement with your merchant cash advance lender. Generally, repayment occurs over a short, fixed period, often between three to twelve months. Unlike traditional loans with set monthly payments, MCAs require daily or weekly payments directly from your business bank accounts. This method may seem manageable at first, but it can severely impact your cash flow in the long run.

The constant deduction from your sales revenue can make covering other essential business expenses difficult, leading to further financial stress. In some cases, the high cost of borrowing, reflected in exorbitant interest rates and fees, can extend the repayment timeline indefinitely. It’s crucial to carefully review the terms of your MCA agreement to understand the true cost and duration of the advance. Should you find yourself struggling with the repayment structure, our MCA debt relief lawyers can negotiate more favorable terms or alternative solutions to ease your burden.

Our law firm has experience dealing with merchant cash advance companies and the intricacies of these financial products. We guide you through the entire process, offering sound advice and strategic counsel to help you manage your MCA debt effectively. With us on your side, you can regain control of your finances and focus on running your business effectively.

Additional Pitfalls of Taking a Merchant Cash Advance

• Phone Calls: Be ready for additional phone calls from brokers. “Stacking” is an unfortunate side effect of the MCA industry. After a lien has been placed on you and your business, this information becomes publicly available after a period of time. From here, lists are created and sold to brokers, who will contact you and see if you need additional funds.
• Credit Pulls: Although online lending has created an efficient and streamlined process, there are drawbacks. When you fill out an application, there is a chance your personal credit report is being pulled. Be wary of comparison shopping. Unsuspecting consumers think they are researching different options, only to find out their personal credit report is being pulled. Multiple credit reports pulled within a short time frame can negatively impact a person’s credit rating.
• APR: As stated above, APRs on advances are extremely high. Even though this industry has become competitive, most of these APRs on advances are still in the range of 40% – 350% for APRs.

Have You Worked With Any of These Companies?

• 1st Global Capital
• Accord Business Funding
• Ace Funding Source
• ADVANCE MERCHANT SERVICES, LLC
• Advantage Capital Lending
• BFS Capital
• CAN Capital
• Cascade Orthopedics
• Colonial Funding
• Credibly (Retail Capital)
• Dealstruck
• Forward Financing LLC
• Fox Capital Group, Inc (FCG)
• Fundkite Funding
• GLD Factoring
• Green Capital Funding
• High Speed Capital
• IOU Central Inc. (IOU Financial)
• itria Ventures LLC
• Kabbage
• Kash Capital
• Lendini
• LG Funding, LLC
• Loan Builder
• Mantis
• ML Factors
• MULLIGAN FUNDING,LLC
• Nextwave Enterprises, LLC
• Oceans 1212
• On Deck Capital
• Orange Advance
• Paladin Capital Services Inc.
• Pearl capital
• PIRS Capital
• Platinum Rapid Funding Group LTD.
• Priority Funding
• Quarterspot
• Queen Funding LLC
• Quick Fix Capital
• Quicksilver Capital
• Rapid Advance
• Roc Funding Group
• Shizoom
• Silverline Service
• SPG Advance LLC
• Strategic Funding Source, Inc. (SFS)
• Swift Capital
• The Smarter Merchant
• Thryve Capital Funding LLC
• Total Enrolled Debt
• Vader Servicing LLC
• Vital Cap Fund (Emerald Group Holdings LLC)
• Web Bank
• Wise Funding Group
  

What Happens if I Default on My Merchant Cash Advance?

Defaulting on a merchant cash advance can have serious repercussions. When you default, it means you’ve failed to make the required daily or weekly payments as agreed upon in your contract. This can trigger a chain reaction, starting with aggressive collection efforts by the merchant cash advance lenders. They may employ tactics such as withdrawing larger amounts from your business bank accounts or pursuing legal actions, such as a merchant cash advance lawsuit, to recover their money.

The immediate impact of defaulting includes strained business operations due to depleted cash flow and the potential for additional fees and penalties. Moreover, defaulting can damage your business credit score, making it harder to secure future financing. Some MCA agreements include provisions that allow lenders to seize personal assets, which heightens the risk for business owners who have provided personal guarantees.

If you’re facing default or are concerned about missing payments, it’s imperative to act quickly. Our merchant cash advance attorneys are experienced with MCA debt settlement and can negotiate with your lender to restructure your payments or reduce the total amount owed.

Confessions of Judgement Agreements: How They Limit Your Options and What You Can Do

A Confession of Judgment (COJ) is a legal agreement that many merchant cash advance lenders include in their contracts. When you sign a COJ, you essentially waive your right to defend yourself in court should the lender file a claim against you. This allows the lender to obtain a judgment without a trial if you default on the loan, bypassing the usual legal procedures. While this might expedite the process for the lender, it significantly limits your ability to contest the debt or negotiate terms.

Signing a COJ can have severe consequences for your business. Once the judgment is obtained, the lender can immediately move to seize your assets, garnish wages, or take other aggressive collection actions. This obviously impacts your current cash flow, jeopardizing your business’s very existence. Many business owners sign these agreements without fully grasping the extent of their implications, leaving themselves vulnerable to swift and often devastating recovery actions.

If you have signed a COJ or are being pressured into one, our MCA debt relief lawyers can provide crucial assistance. We can explore options to challenge the validity of the confession, negotiate with the lender, or work to mitigate its impact. If you haven’t signed a COJ yet, we can advise you on alternative financing options that better protect your rights and interests. Speak with us today to better manage your merchant cash advance debt.

McCarthy Law Will Defend Your Business

As business debt lawyers, McCarthy Law attorneys will work with you personally to learn more about you, your debt, and your challenges and devise an all-inclusive plan. We have helped many like you find their way out of these challenging situations.

Merchant service account collection can be very aggressive. We negotiate with your creditors for large reductions in these debts. Let’s talk today at no charge.

You can also learn more about second mortgage debt, commercial debt collection, and more.

FAQs

Answering Your Merchant Loan Debt Questions

Can I negotiate a settlement with my MCA lender without going to court?

Yes, negotiating a settlement directly is often possible. Many MCA companies prefer to settle out of court to avoid their own legal fees. The process involves showing them that your business’s financial situation makes fulfilling the original agreement impossible. A successful debt settlement usually results in paying back a lower amount than you originally owed, providing significant debt relief for your business.

This stops the daily or weekly payment from hitting your bank account, which can immediately improve your cash flow. It’s a structured negotiation where we present your financial reality to the lender and work toward a resolution.

Is it legal for a merchant cash advance lender to withdraw funds after I’ve revoked authorization?

If you’ve formally revoked the ACH authorization but the merchant cash advance company continues to pull payments, you are likely questioning the legality of these withdrawals from your bank account.

Generally, no. When you properly revoke an ACH authorization in writing, a lender’s continued attempts to withdraw money from your bank account can be a violation of electronic fund transfer regulations. The key is how you revoked the authorization. You need to follow the specific procedures outlined in your original MCA agreement and also notify your bank directly.

Simply telling the MCA representative over the phone is usually not enough. You need to create a paper trail. Document everything in writing and send it via certified mail. Informing your bank to place a “stop payment” on the debits from that company adds another layer of protection.

If they continue to take funds, this action can give you legal leverage. We use these violations to strengthen your position in a debt settlement negotiation or, if needed, in a lawsuit against the lender. It shows they are operating in bad faith.

What red flags should I watch for before signing another merchant cash advance offer?

To protect your business from future financial distress, it’s smart to know the specific red flags and warning signs that signal a potentially predatory merchant cash advance offer.

Signing a second MCA, often called “stacking,” can seriously damage your business’s cash flow. The combined daily payments can become unsustainable. Before you accept another offer, look carefully for these common red flags. The effective interest rates are often hidden behind complicated fee structures, making a small business loan seem much more expensive than it is.

• Extreme pressure to sign the agreement immediately.
• Vague or confusing language about the total payback amount and the effective APR.
• The agreement contains a “Confession of Judgment” (COJ), which allows the lender to get a court judgment against you without a hearing.
• Promises of easy funding without a review of your business’s ability to handle the payment.
• The funding company is unwilling to provide references or has poor online reviews from other business owners.

Can merchant cash advance lenders freeze my bank accounts or seize assets without warning?

The fear of a frozen bank account or asset seizure happening suddenly is a major source of stress when you’re dealing with an aggressive merchant cash advance company.

An MCA company cannot just freeze your bank account or seize your assets out of the blue. They first need to obtain a court judgment against you. This means they must file a lawsuit, serve you with legal papers, and win the case in court. A common, and troubling, exception is if your contract included a Confession of Judgment (COJ). A COJ waives your right to defend yourself in court and allows the lender to get a judgment almost automatically if you default.

Once they have a judgment, they can then legally levy your bank accounts and other business assets. The key is that a legal process must happen first. You will receive notice of a lawsuit (unless you signed a COJ). Responding to that lawsuit is your opportunity to defend your business and seek a more favorable outcome, like a debt settlement. Ignoring a lawsuit is the surest way to have your accounts frozen.

How does MCA debt settlement affect my business credit and future financing options?

An MCA is not technically a business loan, so it doesn’t report to business credit bureaus in the same way. Therefore, an MCA debt settlement itself doesn’t typically appear on your business credit report as a negative mark. However, the financial distress that led to needing debt relief can impact your credit. For instance, if the MCA lender obtained a court judgment against you, that public record can harm your credit. The main benefit of settling is that it resolves the debt and frees up your cash flow, putting your business in a much healthier financial position to qualify for better financing options in the future. Once the aggressive daily payment is gone, your bank statements look stronger to traditional lenders.