Merchant Cash Advance Attorney New York

Running a business in New York is tough, and sometimes you need quick cash to keep things moving. That’s where merchant cash advances (MCAs) come in. They might seem like a quick fix, but only before long, those repayments, high fees, and endless demands can feel like they’re drowning your business. Sound familiar?

At Colonna Cohen Law, we get it. You were just trying to do what’s best for your business, but now you’re stuck in an MCA agreement that’s weighing you down. Maybe the payments are crushing your cash flow or you’re dealing with a lender who won’t cut you some slack no matter what.

Whatever your situation, our merchant cash advance lawyer can help you regain stability in this time of uncertainty. We understand the merchant cash advance industry and its nuances better than others and strive to provide individualized attention to every client.

A merchant cash advance (MCA) provides businesses of various sizes with a lump sum in exchange for a percentage of future sales. While it’s marketed as quick funding, MCAs often include high fees and confusing terms that can trap borrowers. If you’re facing issues with an MCA, a merchant cash advance attorney in New York experienced in MCA law can help you protect your business and negotiate better terms.

Merchant cash advance debt relief involves negotiating with lenders to reduce or restructure repayment terms. Strategies can include disputing excessive fees, modifying payment schedules, or challenging unfair agreements. A MCA debt relief attorney can guide you through the process and help you find effective solutions for debt relief for MCA loans to protect your business.

Merchant cash advance FAQs provide general guidance regarding repayment terms, debt relief options, disputes with the lender, merchant cash advance litigation, and appeals. If you’re facing challenges with an MCA agreement, a merchant cash advance attorney in New York can answer your questions and provide guidance tailored to your specific situation.

What Is Merchant Cash Advances?

A merchant cash advance (MCA) is a way for businesses to get quick cash by selling a portion of their future sales. It’s not a loan, but a cash advance you repay daily or weekly based on your revenue.

Sounds simple, right? But here’s the catch—merchant cash advances often come with sky-high fees and confusing terms that can make repayment a serious burden.

While an MCA might feel like a lifesaver at first, it can quickly become a problem. If your sales slow down or you miss payments, you could face harsh penalties or even legal action. Many business owners find themselves in a cycle of debt, with payments eating away at their profits and causing their business performance to suffer.

Regulation of Merchant Cash Advance Companies

Merchant cash advance (MCA) companies operate in a gray area when it comes to regulations. Unlike banks and traditional lenders, MCAs aren’t always subject to the same strict rules, which can leave borrowers vulnerable to predatory practices. That’s why it’s uncommon for MCA companies to charge sky-high fees, enforce unfair terms, or use aggressive collection tactics that can cripple a business.

And here’s another problem: merchant cash advances aren’t classified as loans, so they don’t have to follow lending laws like interest rate caps or borrower protections. While some states have taken steps to regulate MCA companies, many still operate with little accountability. This can create a major headache for businesses caught in unfair merchant cash advance agreements.

The solution? Consulting with a merchant cash advance lawyer before you sign an MCA agreement. A lawyer will help you understand what you’re agreeing to in plain language.

Some states, including New York, have taken steps to bring transparency and fairness to the merchant cash advance industry. These efforts aim to protect business owners from misleading agreements, excessive fees, and aggressive collection tactics.

In New York, laws focus on requiring clearer disclosures from MCA providers. For example, MCA companies must provide details about total repayment amounts, fees, and the effective annual percentage rate (APR) of the advance. This allows businesses to make informed decisions and compare financing options more easily.

Usury Laws and Merchant Cash Advances

Usury laws are designed to protect borrowers from unreasonably high interest rates, but here’s the catch—merchant cash advances often sidestep these laws entirely. Why? As mentioned earlier, MCAs aren’t considered loans. Instead, they are categorized as sales of future revenue. This loophole means MCA companies can charge fees that would never be allowed under traditional lending rules.

For many businesses, these fees feel just as crushing as high-interest rates. Some courts have started to crack down on MCAs that cross the line, finding that certain agreements violate usury laws. But figuring out whether your MCA agreement is enforceable under these laws can be tricky and may require the assistance of a merchant cash advance lawyer.

Regulation of Merchant Cash Advance Companies

Evaluating Merchant Cash Advance Agreements

If you don’t fully understand the terms of your MCA agreement, don’t sign unless you’re ready to accept long-term headaches for your business.

Let’s break down the key points to pay attention to when evaluating an MCA agreement so you know whether it’s a good idea to put your signature at the bottom of the document.

1. Understand the True Cost

Merchant cash advances don’t have traditional interest rates, but that doesn’t mean they are cheap. Instead, they come with factor rates, which can make the total cost much higher than expected. Always calculate the total repayment amount and compare it to other financing options—you might be shocked at how much you’re really paying.

Red flags to watch out for:

The total repayment amount isn’t disclosed in the agreement.
The agreement doesn’t include a clear breakdown of how payments are calculated.
The factor rate is extremely high (e.g., 1.4 or higher).

2. Look for Hidden Fees

Some MCA agreements sneak in fees that aren’t obvious upfront, like administrative charges or even penalties for early repayment. These fees can pile up fast and make repayment even harder. Take a close look at the fine print and don’t be shy to ask questions before signing anything. After all, as a business owner, you need to know what you’re agreeing to.

Red flags to watch out for:

The agreement mentions fees without specifying exact amounts.
There are penalties for paying off the advance early or for small administrative errors.
Surprise fees appear during the repayment process that weren’t disclosed upfront.

3. Beware of Confession of Judgment Clauses

Many MCA agreements include a “confession of judgment” clause. This allows the lender to go straight to court and get a judgment against you without a trial if they claim you’ve defaulted. These clauses can put your business at serious risk, so make sure you know if your agreement includes one.

Red flags to watch out for:

The agreement includes a confession of judgment clause, especially if it isn’t explained.
The lender downplays or avoids discussing this clause when asked about it.
There’s no opportunity to dispute the lender’s claims in court before judgment is entered.

4. Ensure Terms Match Your Business’s Cash Flow

MCAs are repaid through daily or weekly deductions from your sales. If your business has inconsistent revenue, this repayment structure could cause cash flow problems. Before signing, make sure the terms are realistic based on how your business earns money.

Red flags to watch out for:

The contract includes harsh penalties for missed or delayed payments.

The agreement doesn’t consider seasonal or inconsistent revenue patterns.

There’s no flexibility in repayment schedules, even if your sales drop.

Appealing a Merchant Cash Advance Decision

Appealing a merchant cash advance decision means challenging the lender’s actions or decisions through negotiation, mediation, or even legal action. This could involve disputing excessive fees, questioning the enforceability of certain contract terms, or fighting back against unfair collection practices.

Here are some of the most common ways to appeal a MCA decision:

Negotiate directly with the lender: You can request a review of the terms to find a mutually beneficial solution. When negotiating, propose a repayment plan that better aligns with your business’s cash flow.
Challenge the enforceability of the agreement: Review the contract for illegal or misleading clauses, such as hidden confession of judgment clauses. Argue that the MCA agreement is void if it doesn’t comply with applicable regulations.
Request mediation or arbitration: Engage a neutral third party to help resolve the dispute without going to court. Many agreements include arbitration clauses—if so, you can leverage this to negotiate fairer terms.
File a legal claim: If the lender refuses to cooperate, consider filing a lawsuit to challenge the agreement. A court will evaluate whether the MCA terms are lawful and enforceable.

At Colonna Cohen Law, we won’t let a bad MCA decision ruin your business. Our merchant cash advance lawyer in New York can guide you through the appeal process, identify weak points in the lender’s position, and fight to protect your business.

Confession of Judgment and Merchant Cash Advances

If you’ve signed a merchant cash advance agreement, there’s a chance it includes a “confession of judgment” clause without you realizing it. This clause can be a ticking time bomb for your business.

The clause allows the lender to skip the legal process and go straight to court for a judgment against you if they claim you have defaulted. They can seize your assets, freeze your accounts, or garnish your income—all without giving you a chance to defend yourself.

Sounds unfair? That’s because it is. These clauses are often buried deep in MCA agreements, written in legalese that makes them hard to spot. Many borrowers don’t even realize they’ve agreed to such extreme terms until it’s too late. While confession of judgment clauses were once more common, states like New York have started cracking down on their use to protect businesses from these aggressive tactics.

Enforceability of Merchant Cash Advances

Many business owners in New York don’t realize that not every MCA agreement is legally enforceable. Sometimes, the terms of your MCA agreement feel more like a trap than a solution.

Merchant cash advance companies often rely on borrowers assuming their hands are tied, but in reality, there are legal limits to what they can demand. Enforceability comes down to these six conditions:

Clear and transparent terms: The agreement must clearly outline repayment terms, fees, and conditions.
Genuine sale of revenue: The contract must show that the MCA is based on future revenue, not fixed loan repayments.
Reasonable fees: Excessive fees or charges that mimic high-interest loans could make the agreement unenforceable.
Absence of illegal clauses: Terms like confession of judgment clauses may be invalid in some states, such as New York.
Compliance with state laws: The agreement must adhere to state regulations governing merchant cash advances or lending practices.
No fraud or misrepresentation: The lender must not have misrepresented terms or pressured the borrower into signing.

An experienced merchant cash advance lawyer can help you review your merchant cash advance agreement and explain your options if you signed an unenforceable contract.

Strategies for Merchant Cash Advance Debt Relief

Merchant cash advances might seem like an easy solution at first, but they can quickly become a heavy financial burden. If your business is struggling to keep up with daily or weekly payments, there are strategies to take back control. Let’s take a look at some of them.

1. Negotiate a Settlement with the Lender

Merchant cash advance lenders in New York are often open to negotiation if they believe it’s the best way to get their money back. Settling the debt can involve paying a reduced amount in a lump sum or agreeing to lower the total repayment.