When Should You Hire a Merchant Cash Advance Attorney?
If you’re a business owner who entered into a merchant cash advance, receivables financing agreement, purchase and sale of future receivables, etc. (MCA) and now struggles to pay it back, you’re not alone. The merchant cash advance industry is booming, but many business owners find themselves overwhelmed by daily or weekly remittances, confusing contracts, and aggressive collection tactics.
So, when is it time to hire a merchant cash advance attorney? If you’re having trouble making remittances, facing legal threats like a lawsuit or Uniform Commercial Code (UCC) letters being sent to your customers or accounts receivables, or feeling unsure about your rights, then talking to a merchant cash advance attorney can make a big difference.
This article will explain what merchant cash advances are, why the merchant cash advance industry is so tricky, and how a merchant cash advance lawyer can help you get back on track. We’ll also cover the legal issues around MCAs, what to watch out for, and how to defend your business.
Why Are So Many Businesses Struggling with MCA Repayment?
A merchant cash advance is not a traditional loan. Instead, it’s an advance on your business’s future revenue. An MCA is easier to get approved for compared to a traditional loan, but there’s a catch. MCAs can be extremely expensive, burdensome on your business's cash flow, and usually require a personal guarantee. The fees are usually much higher than a regular loan, and the daily or weekly remittances can quickly drain your cash flow. Many business owners don’t realize how much they’ll end up paying until it’s too late. If you fall behind, the MCA company will most likely file a UCC lien against your business assets or receivables and file a lawsuit against all parties liable under the MCA agreement.
Quick MCA Tips for Business Owners:
If you can’t keep up with your MCA remittances, a merchant cash advance attorney can help you understand your options right away.
A merchant cash advance attorney can review your contract, explain what you owe, how much money you’re paying a broker for their commission, and help you fight back if the terms are unfair or if the funder is being too aggressive.
If you’ve received a legal notice or a UCC lien, don’t wait. Talk to an attorney who knows merchant cash advance law as soon as possible.
How a Merchant Cash Advance Attorney Can Help You
Hiring an attorney isn’t just for MCA lawsuits. These merchant cash advance attorneys help business owners in many ways, especially if you’re struggling with MCA debt. Here’s how they can help:
Disputing UCC Liens and Defending Your Business
When you sign an MCA agreement, the provider often files a UCC lien. This is a public lien record filed with the Secretary of State where the business assets are located that provides notice to all third parties stating the funder has a right to foreclose on your business’s assets if you don’t pay. If you fall behind, they might try to freeze your accounts receivable (PayPal, Square, Cash App, Intuit, etc.) or collect directly from your customers.
A merchant cash advance attorney can check if the UCC lien was filed correctly or dispute improper or overly broad liens. An MCA lawyer can also negotiate with the MCA provider to remove or limit the lien. One key goal of a merchant cash advance lawyer is to protect your business assets from aggressive collection actions.
Handling Loan Disputes and Negotiating Better Terms
MCAs are legal, but not regulated the same way as traditional loans. This means some bad actors in the merchant cash advance industry use confusing contracts or charge sky-high fees. If you’re stuck with unfair terms, a merchant cash advance lawyer can review your MCA agreement and spot illegal or unfair terms. They can advise you on which defenses might work in your case. A merchant cash advance attorney can negotiate with the funder to lower your remittance obligations during times where your receivables are lower than they were at the time of funding, reduce fees, or attempt to settle the case that’s favorable to all parties involved . In the end, they’ll make sure any new agreement follows state lending laws and has clear remittance terms. They can help you understand your rights and protect your personal and business assets.
Defending Against Aggressive Lenders
If you’re being sued or threatened by a merchant cash advance company, it’s often best not to try to tackle it alone. An attorney for merchant cash advances can defend you in court or in settlement negotiations. They can challenge confession of judgment clauses that let funders get a court order without a trial. Merchant cash advance attorneys help fight back if the MCA company used unfair or deceptive practices.
The Legal Issues Around Merchant Cash Advances
The merchant cash advance industry is sometimes called the “wild west” of business lending. That’s because merchant cash advance legal issues are complicated and there’s not much regulation. Here’s what you need to know:
MCAs Are Legal, But Not Loans: It’s important to understand that MCAs are not loans, so there are additional requirements that a funder needs to follow in order for the transaction to be considered an MCA.
UCC Law Applies: MCA companies usually include a provision in the contract that provides them with Uniform Commercial Code (UCC) remedies, which involves taking a security interest in business and/or personal assets. If you default on the MCA agreement, the funder will attempt to foreclose on those assets resulting in liens being placed with your accounts receivables like PayPal, Cash App, Square, Intuit, or your customers that are paying you directly.
Predatory Practices: Are merchant cash advances predatory? Yes, they can be considered predatory. Because there are few rules, some MCA providers charge huge fees, hide costs, or use confusing contracts to trap businesses in debt. If you think your MCA is unfair, a merchant cash advance attorney can help you fight back.
Some States Taking Notice of MCA Industry Issues: Some states, like New York and California, have started to require more disclosure from MCA companies. The Federal Trade Commission can also go after companies that use unfair or deceptive practices.
How to Defend Your Business Against Merchant Cash Advance Funder
If you’re having trouble with your MCA, you have options. Here’s what you can do, and how a merchant cash advance attorney can help:
Review Your Contract: An attorney can look for hidden fees, illegal terms, or confession of judgment clauses that might hurt you. They can tell you what’s enforceable and what’s not.
Dispute Unfair Practices: If the MCA provider is harassing you, threatening your customers, or using other aggressive tactics, your attorney can step in and defend your rights.
Fight in Court: If you get sued, your MCA lawyer can defend you and try to get the case dismissed or attack alleged total outstanding balance due to unenforceable terms. Finding MCA debt relief is a primary objective for merchant cash advance law firms.
Remove UCC Liens: If the MCA provider won’t remove an improper lien, your attorney can help you get those liens terminated.
The best MCA attorneys know merchant cash advance law and how the industry works. They have experience negotiating with MCA providers and defending business owners. The best merchant cash advance attorneys explain your options in clear, simple language and keep you informed every step of the way. At Wilkie Puchi LLP, we pride ourselves on all of these areas. Having sat on both sides of the table, we know the merchant cash advance industry inside and out. We offer trusted and transparent legal representation.
Don’t Wait to Get Help
The merchant cash advance industry is growing fast, but so are the problems for business owners who can’t keep up with payments. If you’re struggling with MCA debt, facing a UCC lien, or getting legal threats, now is the time to talk to a merchant cash advance attorney. These lawyers can help you understand your rights, defend your business, and find a way out of debt.
Remember, you don’t have to face MCA problems alone. The sooner you reach out to a merchant cash advance lawyer, the more options you’ll have to protect your business and your future. Don’t wait until it’s too late. Contact Wilkie Puchi LLP today.