Merchant Cash Advance Debt Relief
There are many reasons a business chooses to take out a merchant cash advance, but the primary one is this: necessity. The merchant cash advance system is relatively new in the toolbox of financial tools. They’re one of the only options left to small businesses in need of financial help, and they have become predatory. This is why you might need a merchant cash advance attorney.
At Merchant Cash Advance Law Firm P.C., attorney Dominick Dale takes on the fight for businesses facing the struggles of overcoming merchant cash advance debt. You and your business have rights, and debt collectors can be extremely aggressive with you. As your lawyer, Mr. Dale will stand up for you and defend your business tooth and nail. To receive a free 30-minute phone consultation, call 347-588-5590 or email.
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How A Merchant Cash Advance Works
A merchant cash advance is allegedly not a loan. The Merchant Cash Advance companies alleged that It is an “advance” on future earnings in your business attached to your accounts receivable. These companies may go further and place a UCC lien against your profits, which could put you out of business.
Interest rates on these loans are often extremely high, far in excess of what a standard operating loan is, and paying them off is difficult without a settlement..
Why MCAs Are One Of The Few Options For Businesses
Merchant Cash Advances (MCAs) are often considered by businesses for several reasons, although it’s important to note that they may not be suitable for every business, and there are both advantages and disadvantages associated with this financing option. Here are some reasons why MCAs might be considered as one of the few options for businesses:
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- Quick Access to Capital: MCAs typically offer a quick and straightforward application process. Businesses in urgent need of capital may find MCAs appealing due to their speed of approval and funding.
- No Collateral Requirement: Unlike traditional loans, MCAs are unsecured, meaning businesses don’t need to provide collateral. This can be advantageous for businesses that lack significant assets or are unwilling to pledge collateral.
- Flexible Repayment Structure: Repayments for MCAs are often tied to daily credit card sales or a percentage of daily revenue. This flexible structure can be appealing to businesses with fluctuating cash flows, as they repay more during profitable periods and less during slower times.
- Approval Based on Revenue: MCAs are often approved based on a business’s daily credit card transactions or overall revenue, rather than traditional credit scores. This can make them accessible to businesses with a less-than-perfect credit history.
- Ease of Qualification: The qualification requirements for MCAs are generally more lenient compared to traditional loans. Businesses with a short operating history or lower credit scores may find it easier to qualify for an MCA.
But, as they say, the Devil is in the details. The easier the process the harsher the penalty. Rest assured, the MCA will make sure it does everything it can to be repaid.
Frequently Asked Questions About Merchant Cash Advances In New York
Here are some commonly asked questions to help you understand merchant cash advances better in the state of New York:
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- What is the usury and when does it apply in New York?
- Why do usury laws not apply to merchant cash advances in New York?
- How are merchant cash advances legal in New York?
- What are the potential drawbacks of a merchant cash advance in New York?
- What can happen if I default on a merchant cash advance?
- What debtor’s rights defense does
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What is usury and when does it apply in New York?
Usury refers to the practice of charging excessive interest rates on loans. In New York, interest rates are heavily regulated to protect borrowers. State laws set strict limits on interest rates that lenders can charge, to prevent exploitation.
Usury laws in New York are particularly stringent to safeguard consumers and businesses from predatory lending practices. These laws aim to maintain fairness in lending transactions by establishing clear boundaries on interest rates that lenders can impose, promoting transparency and consumer protection in financial dealings.
Why do usury laws not apply to merchant cash advances in New York?
In New York, usury laws govern the maximum interest rates lenders can charge on loans to protect borrowers from excessive fees. However, these laws typically do not apply to merchant cash advances.
Unlike traditional loans, merchant cash advances are structured as a contract for the sale and purchase of future receivables, not loans with interest. This distinction allows merchant cash advances to operate outside usury regulations, providing businesses with a different financing option.
How are merchant cash advances legal in New York?
Merchant cash advances are legal in New York because they are structured as sales transactions rather than loans.
By purchasing future receivables at a discounted rate, providers assume the risk associated with fluctuations in the business’s sales volume. This structure falls outside traditional loan regulations, offering flexibility in repayment based on sales performance.
What are the potential drawbacks of a merchant cash advance in New York?
While merchant cash advances provide quick access to funds without requiring collateral or a high credit score, they can be costly compared to traditional loans.
Factor rates or fees applied to the advance can result in a high effective APR, and the repayment structure tied to sales volume may strain cash flows if sales decline unexpectedly.
What can happen if I default on a merchant cash advance?
Missing debt repayments or defaulting on a loan can have severe repercussions. The fallout could be mild in some cases, but merchant cash advances (MCAs) taken out by businesses can have more stringent terms and harsher consequences. Unfortunately, these situations can be unavoidable, especially if external factors impact the business’s earnings.
The penalties for defaulting on MCAs can vary, depending on the agreement between the lender and the debtor. Still, some possible scenarios usually happen to businesses that default on MCAs, including the following:
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- The business can be subject to paying additional fees on top of the advance, including legal costs, late fees and other charges.
- The lender or merchant may enforce the existing agreement or take legal action to go after the business, including the employer or owner, if they are responsible for the defaulted repayments.
- The merchant can seize the business’s assets placed as collateral for the advance, causing potential losses.
- The missed payments can reflect on the debtor’s record, making it challenging to seek more funding in the future.
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Additionally, specific collection-related policies may not apply to MCAs, exposing debtors to aggressive collectors who may perform their duties unethically.
Determining Ways to Address Issues Involving MCAs
Other times, debtors may find it challenging to comply with an MCA’s terms because of unreasonable clauses that may seem unfair and unfavorable. These instances can increase the likelihood of defaulting on payments, leaving the debtor in hot water. If a business owner faces risks of missing payments or defaulting on an advance, seeking legal counsel can be vital. Doing so can help determine the appropriate options to address the situation, considering the debtor’s unique circumstances.
Rights Of MCA Debtors Have Against Aggressive Collection Tactics
Merchant cash advances (MCAs) are a double-edged sword for small business owners. They offer quick cash but come with a catch: they aren’t considered business loans and face far less regulation. This lack of oversight can lead to aggressive collection tactics that leave you feeling cornered and put your business under threat. But don’t back down. You have rights — know them and use them.
Right to dispute inaccuracies
First off, you have the right to dispute any inaccuracies in the amount you owe or other details. If something doesn’t add up, challenge it. Demand a detailed breakdown of how they calculated what you supposedly owe. Don’t let them bully you into paying more than you should.
Right to dispute the debt
Question the debt itself. You have the right to dispute whether the debt even exists if you don’t recognize it or you know it belongs to another party. If you believe the MCA company is coming after you without a valid reason, make them prove it. This isn’t a time for complacency; it’s a time to fight back.
Right to request details
You’re entitled to request full details about the debt from the MCA provider. This includes the original contract, payment history, and any communications they claim to have had with you. Don’t settle for vague answers. Insist on transparency.
Right to defend yourself in court
If the MCA company takes you to court, don’t panic. You have the right to defend yourself. However, facing this battle alone can be daunting. Your best shot at a fair outcome is to team up with a lawyer who knows the ins and outs of MCA law. They’ll be your bulldog in the courtroom, ensuring your rights are front and center.
Attorney Dominick Dale gets right to work for clients. He learns the details of their case and provides a detailed plan of action for them. Then he gets to work as the tough, bulldog litigator he is to protect you, your rights and your business.
Free 30-Minute Consultation About Your MCA Debt
As your lawyer, Dominick Dale will fight for your business with the strength you deserve from your attorney. Reach out for a consultation by phone at 347-588-5590 or send an email using this form.