Boost your cash flow, safeguard your assets, and secure your business future
As a Florida business owner struggling with cash flow, a merchant cash advance can be tempting. This type of business financing is easy to qualify for and can get you cash to spend within just one to two business days. However, Florida merchant cash advances are extremely expensive and have the potential to do more harm than good for a small business.
If that sounds familiar, know there is help out there. A Florida merchant cash advance attorney can assist you in resolving the issues you face with your merchant cash advance and specifically threats of litigation or actual litigation filed against you due to default of your MCA.
Sometimes known as a credit card processing loan, merchant cash advances aren’t technically loans. Instead of receiving a lump sum loan from a lender that the borrower pays back in fixed installments over several years, the merchant cash advance lender gives you money upfront in exchange for a cut of your future sales, plus fees. That means as your sales increase or decrease, so do your payments. MCA agreements generally require payments to get debited directly from your business bank account daily or weekly. The repayment period is often much shorter than typical business loans — around three to 18 months.
Sometimes, merchant cash advance companies may require fixed weekly payments instead, based on your estimated monthly revenue. This may be true for businesses that don’t rely heavily on credit card sales.
Merchant Cash Advance funders also charge a factor rate rather than a typical interest rate. Factor rates range from about 1.1 to 1.5, depending on your business’s expected performance. The riskier your company, the higher the rate. To calculate how much an MCA will cost, multiply the borrowed amount by the factor rate. So, if your MCA is for $40,000 and your factor rate is 1.3, you’d pay a total of $52,000 ($12,000 in fees).
Merchant cash advances are legal in Florida, as there are no laws making them illegal. They are considered a source of funding for businesses and are typically not considered loans.
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Some merchants in Florida have complained that MCAs are essentially loans in disguise and should be subject to the state’s usury law. (That’s a law that prevents lenders from charging excessively high interest rates on loans.)
Some states are very clear in their laws regarding what constitutes a loan versus the purchase and sale of receivables. But Florida has historically been less authoritative. However, in January 2021, a Florida appellate court held that a merchant cash advance is, in fact, a purchase and sale agreement and not a “disguised loan.” Therefore, MCA companies are not subject to Florida’s criminal usury statute.
That means Florida MCA funders can continue to charge factor rates that are as high as 350% or more when expressed as an annual percentage rate. This makes it easy to get trapped in a cycle of debt. Especially when high MCA payments significantly reduce cash flow and your ability to manage the business as a result.
But another important Florida law dictates when an MCA is subject to usury statutes. If the merchant has to pay back their advance unconditionally — as in, no matter what — it’s actually considered a loan. In that case, the MCA lender can’t charge excessively high fees. Otherwise, they’d be committing criminal usury.
With a true merchant cash advance, the funder is buying future receivables. But only if the business is capable of producing those receivables. If there are adverse business conditions (which the merchant can’t control) that cause a Florida-based business to lose money, the lender may have to accept that loss or try to sue the business and business owner in Court.
If you owe MCA debt and are struggling to pay it back, you might benefit from the help of a debt relief law firm. Here are a few signs you need legal assistance:
If you’re struggling with MCA debt in Florida, we can help. Tayne Law’s headquarters are in New York, but we provide legal assistance to clients all over the country—and even the world. Our process is simple and straightforward. Plus, our merchant cash advance attorneys can work with you on personalized solutions that not only eliminate burdensome merchant cash advances and other business debt but also help protect the business’s ongoing cash flow throughout the process.
Tayne Law Group earned the ‘Best Debt Consolidation Service’ for 9 years running. The Better Business Bureau gives us an A+ rating.
Start by scheduling a free phone consultation. We’ll spend this time discussing your situation and learning about your business and any debt you might have. After getting to know you, we can provide a service cost and explain our no-billing policy.
Submit your first payment. When you decide to work with us, you can make your first payment, and we’ll get started right away on your file. At this point, we’ll take over all communications with your creditors. Keep in mind that all work is done by our office and is never outsourced to third parties who don’t know you or your business.
We’ll begin negotiations. We will reach out to your creditors and let them know that you want to resolve your debt. Our debt relief attorneys know how to negotiate. They will work with your creditors and their legal teams to get you the best deal possible to relieve you of the debt.
You’ll be in the loop. We’ll give you updates as we work with your creditors on a final resolution and have an ongoing open-door policy, so you can call anytime for updates. In the meantime, you’ll have the breathing room to focus on keeping your business running.
If your business is struggling with MCA or any other debt, you might not know where to turn or who to trust for help. Know that Tayne Law Group, P.C. is here for you. Our team of experienced debt relief attorneys can help you get your business back on track and out of debt for good. Call us for a free consultation at 866-890-7337 or fill out our short contact form. All conversations are confidential, and we will never share or sell your information.
After more than 20 years of working solely in debt relief, Tayne Law Group has established healthy and long-lasting relationships with business lenders, creditors, and merchant cash advance lenders and companies. Because we’re a law firm, our process is respected, which, in the end, saves you time and money.
The owner of a local food market came to us with $58,000 in debt from his merchant cash advance loan with Everest Business Funding.
The owner of a cheerleading gym came to us as a borrower with $19,028.12 on an MCA with Lendini. She was dealing with other cash advances at the time, and this account became too much to handle.
The owner of a plumbing business was never paid on a big contract. To keep up with the bills he got an MCA with QuarterSpot. When he couldn’t pay the $72,230.64 balance, he became a client.
It depends on if you can pay it off or not. It is definitely a risk.
When you are having trouble with business finances, limited resources, and credit, you may feel that a merchant cash advance or another business loan may be your only option to cover your business expenses.
Many people think they’ll pay off the loan with their next job or sale, but that’s not always a reliable solution. If that money doesn’t come in, you could end up doing more harm than good. MCAs often have very high interest rates, making them harder to pay off.
People who struggle with repayment or default on merchant cash advances could face lawsuits, judgments, UCC liens, frozen bank accounts, or other extreme actions taken by a creditor in these kinds of lending practices.
When you seek business MCA debt relief with Tayne Law Group, know that you have a team of experienced professionals ready to assist and work with you to get you through the process of resolving these kinds of matters. MCA and other cash advance inventory purchases can end up strangling your business, especially if it’s out of control.
“Defaulting” means you haven’t made payments over an extended period of time. If you default on a merchant cash advance, it can be extremely damaging to your business. Defaulting on a loan could result in lawsuits, judgments, and liens from the lender and negative credit reporting to both business credit bureaus and consumer credit bureaus like Experian, Transunion, and Equifax. Unfortunately, this could put you out of business.
If you’ve defaulted or are struggling to make payments, our staff and attorneys are prepared to help you understand how to find relief from your merchant cash advance debts. Your first consultation is free, so we recommend calling us to learn how we could make a difference in your business.
Debt settlement involves negotiating to pay less than what you owe. In many cases, debt collectors are willing to do this because the collection process can be expensive, especially if they resort to suing you. Contact us to discuss options for settling MCA debt.
It’s never too early or too late to call. For many clients, the scariest part is not knowing what’s going to happen. In our free consultation, we’ll discuss your situation, and explain what you can expect, not only from your creditor during this time but also in our debt relief process. Once you’re a client, our staff and debt relief attorneys will create a strategy for how we can help you free up your cash flow and resolve your debt. Call us today at (866) 890-7337 or schedule your free consultation to learn more.
We work with several business creditors and lenders to resolve debt. Here’s a list of some of the more known creditors we work with:
Call to find out if we work with your creditor, (866) 890-7337.
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