Massachusetts Merchant Cash Advance Attorney

What Is a Merchant Cash Advance?

A merchant cash advance is a type of business financing where a company receives a lump sum of money in exchange for a percentage of its future credit card or debit card sales. Importantly, MCAs are not loans. Rather, they are an advance on future sales—the provider is purchasing a portion of your business’s future receivables.

This type of funding is especially popular among small and medium-sized businesses that need quick access to cash and may not qualify for traditional bank loans due to poor credit scores or lack of collateral.

The business repays the advance through daily or weekly automatic deductions from sales transactions. The repayment amount is based on a fixed percentage known as the holdback rate, which typically ranges from 5% to 20%. Instead of a traditional interest rate, MCA providers charge a factor rate—usually between 1.1 and 1.5. To calculate your total repayment, multiply the advance amount by the factor rate. For example, a $40,000 advance at a factor rate of 1.3 means you’ll repay $52,000 in total.

The fees involved can translate into annual percentage rates (APRs) that far exceed those of traditional loans, sometimes surpassing 100%, making MCAs one of the most expensive financing options available.

Legality of Merchant Cash Advances in Massachusetts

Yes, merchant cash advances are legal in Massachusetts. In fact, because they don’t fall under the same laws that regulate other business loans, there are few protections in place for borrowers. For that reason, it’s important to be proactive about seeking legal help.

Massachusetts’s MCA Regulatory Landscape

Massachusetts doesn’t have any laws that directly regulate MCAs, even though the state takes steps to regulate other predatory lending products like payday loans. Unfortunately, this means small business owners are largely left to fend for themselves against predatory MCA lenders.

One meaningful protection Massachusetts business owners do have: Massachusetts has banned the use of Confessions of Judgment (COJs) in commercial contracts. A COJ is a clause that strips a borrower’s right to defend themselves in court—allowing a lender to obtain a judgment against them without any notice or hearing. Because Massachusetts law voids these clauses, MCA providers cannot use this particular tactic against Massachusetts businesses.

Additionally, New York’s 2019 law prohibits New York-based MCA funders from filing a COJ against out-of-state borrowers, providing an extra layer of protection for Massachusetts businesses dealing with New York-based funders.

Despite these protections, the overall lack of MCA-specific regulation in Massachusetts means aggressive lenders can still pursue collection actions, file UCC liens, and pursue lawsuits. Working with an experienced business debt relief law firm remains the most effective way to protect your business interests.

5 Ways MCA Attorneys Help Your Massachusetts Business

An MCA attorney specializes in helping clients who have taken funds from MCA providers or are considering doing so. While each situation is different, here are a few of the primary ways an MCA attorney can support your Massachusetts business:

1. Review MCA agreements

An MCA attorney can review MCA agreements to help you understand the terms and look for red flags—including predatory clauses, hidden fees, and any provisions that could put your personal assets at risk.

2. Negotiate and restructure MCA terms

They can negotiate with MCA providers on your behalf to secure more favorable repayment terms, including lower payments or a longer repayment timeline to alleviate cash flow pressure.

3. Defend against predatory practices

If a business owner believes the terms of their MCA are illegal or predatory, an MCA attorney can provide defense and seek redress—including challenging the enforceability of the agreement or filing a counterclaim if the funder has engaged in illegal conduct.

4. Represent your business in disputes and litigation

If you’ve stopped repayment on an MCA and are being sued for breach of contract, an MCA attorney can represent your business in court, file a response on your behalf, and work to resolve the matter while protecting your assets.

5. Explore debt relief and restructuring options

For businesses facing serious financial distress, MCA attorneys can advise on broader debt relief options—including settlement, debt restructuring, or in some cases, bankruptcy—to help you find a sustainable path forward.

Top Signs You Might Need a Massachusetts MCA Attorney

There are a handful of tell-tale signs that you might benefit from the guidance of a merchant cash advance attorney:

• You signed a personal guarantee, making you personally liable for the business debt.
• Your business is having trouble keeping up with daily or weekly MCA payments.
• You’ve missed multiple MCA payment dates and need to renegotiate.
• You have debt collectors from the MCA demanding payment or threatening legal action.
• You’ve received notice that the provider filed a UCC lien against your business.
• The MCA lender is contacting your clients or vendors directly.
• You’ve been sued by an MCA provider for breach of contract.
• You believe the terms of your MCA agreement are illegal or predatory.

If one or more of these statements hits home, hiring a merchant cash advance attorney might offer the clarity and relief you need.

Why Choose Tayne Law Group for Massachusetts MCA Debt Relief

If your business is struggling due to MCA debt, you may not know who to go to for help. Tayne Law Group, P.C. is a trusted source of legal assistance for businesses struggling with MCA debt. Our team of knowledgeable debt relief attorneys and trained staff can help you understand your options and get your business back on track.

The Tayne Law Group, P.C. is an award-winning business debt relief law firm with more than 20 years of experience negotiating debts like MCAs. We’ve helped countless small businesses with a customized, manageable plan to tackle their MCA debt and get back on track.

Call us for a free phone consultation at (866) 890-7337 or fill out our short contact form to get started. We never sell or share your information, and calls are never outsourced. All conversations are confidential.

FAQs About Merchant Cash Advance Attorneys in Massachusetts

Are merchant cash advances legal in Massachusetts?

Yes, merchant cash advances are legal in Massachusetts. Because they’re classified as a purchase of future receivables rather than a loan, they fall outside the lending regulations that apply to traditional business loans. This means there are few borrower protections in place, which makes working with an experienced MCA attorney especially important.

How do I get out of paying a merchant cash advance in Massachusetts?

You may be able to get out of your current merchant cash advance terms by restructuring the agreement, negotiating a settlement with your lender, or in some cases, refinancing the debt. An MCA attorney can evaluate your situation and advise on the best path forward. You cannot simply stop paying—ignoring the debt can lead to a lawsuit and UCC lien.

What happens if you don’t pay back a merchant cash advance?

If you stop paying on your MCA, the provider can sue you and obtain a judgment. They may also file UCC liens against your business assets or contact your customers and payment processors directly. If your MCA agreement includes a personal guarantee, your personal assets may be at risk as well.

Are MCAs personally guaranteed in Massachusetts?

Yes, merchant cash advances are usually personally guaranteed, meaning the business owner promises to repay the debt if the business itself cannot. This means MCA debt can affect both your business and personal finances.

Can an MCA provider use a Confession of Judgment against a Massachusetts business?

No. Massachusetts law bans the use of Confessions of Judgment (COJs) in commercial contracts, which means MCA providers cannot use this clause to obtain a judgment against your business without notice. This is one of the stronger protections Massachusetts businesses have compared to some other states.