We represent small business owners from all over the country. Some for example are truckers, contractors, roofers, doctors, restaurants, gym owners, retailers, manufacturers and professionals. There is no “typical” client, since debt and high interest loans can effect any business and merchant owner.
Yes, our law firm settles Merchant Cash Advance Loans with all Lenders including: Yellowstone, Everest (Ebf), Funding Circle, Can Capital, Kabbage, On Deck Financing, Lendini, Snap, Platinum, EIN Cap, Mantis, Pearl Beta, Green Capital, Capital Advanced Services, GTR Source, American Express, PayPal, Knight, Itria, 1st Global Systems, Bitty, Swift, Lendr, Wellen, Gibraltar, SRS, SPG Advance, Second Chance Funding, Forward Financing, National Capital, Landmark, Richmond, Alpha, Accel, ACH, Ace, Regal, Bluevine, One Park, Fundbox, Lending Club, Credibility, Lendio, Quarterspot, Fundation, Balboa, Credibly, Payability, National Funding, ML Factors, New Logic, Accord, Americas, BFS , CFG, Elevate, Fora, Fox, Fundworks, Fundzio, In Advance, GRP, Infinity, Jet, Kalamata, Lendfi, Max Advance, MFS Global, Merchant Cash Group, NextWave, Pledgecap and more!
There is currently no law that limits how much interest a merchant cash advance company can charge. Since merchant cash advances are not considered loans in the traditional legal sense, but rather a purchase of future credit card receivable revenues, legally they are considered purchases and thus there is no regulation associated with them, both on a State and Federal level. This means Merchant Cash Advance Funders don’t need to follow state usury laws, which are set by each State to limit how much interest companies can charge on traditional loans or credit cards, making this industry ripe for abuses and like the wild west. The one type of regulation these companies fall under is the Uniform Commercial Code “UCC.” However, this code was written to keep business transactions uniform, but it does not regulate interest rates or cap interest rates in anyway.
Merchant Cash Advance funders charge excessively high fees that can be calculated as an interest rate. While most State Laws prevent the charging of interest in excess of 25% to 30%, a Merchant Cash Advance is well in excess of this. In fact, we have encountered funders that charge in excess of 500%! How can this be legal? Unfortunately, current State Usury Laws do not apply to Merchant Cash Lenders. They are not subject to state usury caps, arguing that the transaction with the borrowing merchant is not a loan, but rather a “cash advance against future revenues.” More specifically, the funders claim they are merely buying future credit card receivables from the small business owner. Why does this matter? There is a very small but significant difference between a purchase of future credit card revenues and a so called loan. Only a loan is subject to usuary laws. Thus, a Merchant Cash Advance interest rate is usually legal.
When a merchant defaults on their Merchant Cash Advance, there are multiple possible repercussions.
Your MCA Funder may choose to enforce all, or some of the following:
(1) File a UCC-1 Lien with an Information Subpoena and Restraining Notice with your creditors, in order to enforce its UCC-1 Lien filing.
These documents are designed to notify those creditors owing funds to the business that they are legally required to send those funds to the Merchant Cash Advance Funder rather than to the business.
(2) Additionally, a Merchant Cash Advance Funder may commence a lawsuit against the business and you personally, for “Breach of Contract” and “Unjust Enrichment.”
(3) Finally, an MCA Funder may also attempt to freeze or levy your bank accounts, including business and even personal bank accounts.
** Please note that your MCA Funder may try enforce its MCA Agreement through the above three tools; i.e. lawsuit, UCC Lien and or freezing a bank account, and each such action is independent of the other and one or all may be brought by the funder.
Therefore, an MCA Funder may choose to enforce all or some of the above enforcement mechanisms in the event of an MCA default.
* SOLUTIONS *
However, not every Merchant Cash Advance default is 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 and you may not need to pay off the MCA.
For a thorough analysis of your legal rights and whether your default is a breach of contract and what may be done to defend your rights, call the Merchant Cash Advance Attorneys at:
Grant Phillips Law, PLLC 516.670.5165
TAKE BACK YOUR RECEIVABLES…