MERCHANT CASH ADVANCE ATTORNEY UTAH

If you answered “Yes” to any of these questions, call your UTAH Merchant Cash Advance Attorneys.

+ MERCHANT CASH ADVANCE LAW IN UTAH +

On the 24^th day of March of 2022, the State of Utah passed new legislation governing Non-Conventional Commercial Financing. The law will formally be adopted and go into force on January 1^st of 2023. Merchant Cash Advances are included in the new legislation.

The new laws passed in SB 0183 is termed the Commercial Financing Registration and Disclosure Act or CFRDA and requires Providers and Funders of Commercial Financing in the State of Utah to;

(1) be registered with the Department of Financial Institutions of Utah; and

(2) include in each financing packet and offer of commercial financing KEY terms and disclosures such as the TOTAL cost of financing, in order to allow a Merchant to make a fully informed decision about new financing and to adequately compare differing offers.

Further, the law provides penalties for non-compliant providers of commercial financing in Utah and the laws apply in equal force to Merchant Cash Advances.

Utah’s CFRDA, means beginning January 1st, 2023, it is illegal for a Person to be involved in a non-conventional commercial financing transaction, unless and until the person is registered with the Utah Department of Financial Institutions. As stated above, CFRDA also demands that Providers of commercial financing provide all borrowers certain transparency and disclosures related to the financing.

The law defines a Provider as a “Person who consummates in excess of five (5) commercial transactions during a calendar year” and includes a Person with ties to a depository banking institution that offers a financing product of the institution to a potential commercial borrower using its own platform. An example of such an arrangement would be Celtic Bank of Utah and Kabbage Funding.

“Commercial Financing Transaction” includes a commercial loan transaction or an accounts receivable purchase transaction. Hence, the law specifically targets Merchant Cash Advance transactions.  In fact, the law defines an “Account Receivable Purchase Transaction” as “a transaction in which a business forwards or otherwise sells to a person all or a portion of the business’s accounts at a discount to the accounts expected value.”

Entities to which the CFRDA does not apply include depository institutions, subsidiaries of or service corporations for depository institutions that are regulated by a federal banking agency, and money transmitters licensed under the Utah Money Transmitter Act.  The CFRDA does not apply to commercial financing transactions secured by real property or that are leases or purchase-money obligations.

The CFRDA requires a provider to give certain disclosures before a commercial financing transaction. Disclosures include “the total dollar cost of the commercial financing transaction,” but falls short of requiring an APR disclosure. 

Thus, in summary in Utah (beginning January 1^st, 2023), a commercial borrower of a Merchant Cash Advance or certain other transactions resulting in the sale of a portion of the borrowing businesses future accounts receivables (to a Lender for a discounted price), requires transparency and disclosures of certain KEY terms, but does not require the APR be disclosed in the financing paperwork.

Merchant Cash Advance Attorney – UTAH

Contact: Grant Phillips Law, PLLC, a New York based Law Firm focused on Merchants and specializing in defending small businesses against Merchant Cash Advance loans across all 50 States as well as Merchant Cash Advances originated by a resident of UTAH.

DEFAULTING ON A MERCHANT CASH ADVANCE

What happens if I default on my Merchant Cash Advance?

When a merchant business defaults on its Merchant Cash Advance payments there are several possible repercussions. Your MCA Funder may;

1. File an Information Subpoena together with a Restraining Notice with your creditors, in order to enforce its UCC-1 Lien filing. These documents are designed to notify everyone that owes money to the business that those funds must be sent to the Merchant Cash Advance Funder instead of you.
2. Additionally, a Merchant Cash Advance Funder may commence a lawsuit against you due to your default for “Breach of Contract” and “Unjust Enrichment.” Please note that your MCA Funder is permitted to enforce its MCA Contract using both a lawsuit and a UCC lien filing and neither Action is dependent on the other.

On the other hand, not every Merchant Cash Advance default is legally a breach of contract. If your receivables have declined for example, your non-payment and subsequent default may not be a breach of the Merchant Cash Advance Contract.

For a thorough analysis of your legal rights and whether your default is a breach of contract and if so, what may be done, call the MCA Attorneys at Grant Phillips Law, PLLC – 516.670.5165

RETAKE YOUR BUSINESS AND RECEIVABLES.

Merchant Cash Advance Attorney UTAH

Did you know?

New York State enacted a law on August 31^st, 2019 banning New York Merchant Cash Advance Funders and other types of lenders from issuing Confessions of Judgment to an out of New York Merchant such as a UTAH Merchant.

In other words, it is illegal to be provided with a Confession of Judgment in the MCA Contract or to be asked to sign a Confession of Judgment as part of a Merchant Cash Advance closing.

*** PLEASE NOTE*** Many Merchant Cash Advance Funders try to include these documents in their contracts and attempt to disguise it by renaming the CONFESSION OF JUDGMENT an “AGREED JUDGMENT.”

Agreed Judgments are Confessions of Judgment.

For example, a borrower from UTAH takes out a Merchant Cash Advance from a New York Merchant Cash Advance Funder, it is now illegal for this funder to issue or ask the UTAH borrowing merchant to sign a Confession of Judgment or Agreed Judgment.

What is a Confession of Judgment?

A Confession of Judgment or COJ is a law that allows one party to obtain a judgment against another party without needing to file a lawsuit or go through the normal litigation process. Think of a Merchant Cash Advance COJ or Agreed Judgment as a judgment on “steroids,” it provides a judgment to the Merchant Cash Advance Funder without you getting a day in Court to defend yourself and your business from allegations of your breaching the Merchant Cash Advance Contract. In summary, a COJ and Agreed Judgment detracts from your fundamental constitutional right to a day in court, also known as Due Process.