For a small business owner, taking out a merchant cash advance (MCA) can be beneficial when finances are tight. But what happens when the lender’s aggressive collection tactics start to suffocate their business?
In New York, California and across the country, there are business owners who are struggling with unfair MCA practices. How can they fight back against an MCA lender who is pushing them to the edge?
Unregulated practices can leave small businesses vulnerable
MCA lenders operate in a largely unregulated space, with some thinking they can charge exorbitant factor rates and other fees. Business owners need to speak up against these practices to protect themselves.
Aggressive collection tactics can intimidate business owners
Additionally, MCA lenders think they can use aggressive collection tactics without fear of reprisal. For example, some lenders may use threatening language or make false claims to get what they want. Business owners must act against these tactics to prevent further harm.
Lack of transparency in MCA agreements can lead to surprise debt
When an MCA agreement lacks transparency, this can lead to surprise debt and unexpected financial burdens. Thus, business owners should speak up against lenders who fail to clearly disclose the terms of the agreement.
Improper UCC lien enforcements can destroy a business
An MCA lender who takes enforcement action on a UCC lien against a business’s assets without providing a required written notice is acting improperly. This move can give the lender priority over other MCA providers, making it difficult for the business to recover. Business owners must challenge lenders who improperly use UCC liens to seize assets, as this can lead to the financial ruin of a business.
Taking informed and immediate action against unfair MCA practices
As the landscape of small business financing continues to evolve, it is clear that more protections are needed to prevent exploitation. For business owners facing unfair MCA practices, seeking the guidance of a legal advocate may help them take informed and immediate action as they aim to rebuild and bounce back.