New York Merchant Cash Advance Attorney

What Is a Merchant Cash Advance?

A merchant cash advance is a form of business financing where a business receives a lump sum of money in exchange for a portion of its future receivables. An MCA is not considered a business loan, but rather an advance that is typically repaid through automatic deductions from the business’s daily or weekly ACH, operating account, and/or credit card transactions. Unlike traditional loans, MCA payments are generally based on sales volume rather than a fixed schedule, making the repayment amount variable and dependent on the business’s sales performance.

Instead of a traditional interest rate, MCAs use a factor rate to determine the cost of the advance. The factor rate, usually ranging from 1.1 to 1.5, is multiplied by the advance amount to calculate the total amount the business owes. For example, an advance of $10,000 with a factor rate of 1.2 means the business will repay $12,000 in total.

The repayment process is also unique for MCAs. Instead of fixed monthly payments, the lender takes a percentage of daily or weekly credit card sales from the business bank accounts until the advance, plus the factor rate amount, is fully repaid. This percentage is known as the holdback rate, which can range between 5% and 20%. The actual repayment amount varies with the business’s sales volume—higher sales mean quicker repayment, while lower sales result in a smaller payment and longer repayment timeline.

Legality of Merchant Cash Advances in New York

Merchant cash advances are legal in New York. However, just because an MCA is legal doesn’t mean it isn’t a threat to your business. MCAs are often considered predatory due to their high costs and the ongoing cycle of debt that business owners can find themselves in.

New York’s MCA Regulatory Landscape

In New York, the regulatory landscape for merchant cash advances is evolving. New York passed S.B. 5470, which introduced specific disclosure requirements for non-bank lenders, including MCA providers. The law requires New York non-bank lenders to provide corporate borrowers specific disclosures—both in the paperwork and before finalizing the funding—covering the total amount financed, total cost, APR, and payment schedule.

New York also passed a 2019 law that prohibits New York-based MCA funders from filing a Confession of Judgment (COJ) against out-of-state borrowers. New York businesses can still enter into COJ agreements, but the law significantly curtailed the use of COJs as a collection tool against businesses in other states.

Despite these developments, the MCA industry in New York has largely been unregulated, leading to issues like high factor rates and aggressive lending practices. The disclosure requirements are an important step toward transparency, but they don’t cap fees or limit aggressive collection tactics. Working with an experienced business debt help law firm is still the most effective way to protect your business interests.

5 Ways MCA Attorneys Help Your New York Business

MCA law firms and attorneys play a crucial role in navigating the complex landscape of MCA agreements. They primarily focus on advising business owners who are considering or currently engaged in MCA contracts, ensuring their personal rights, business, and finances are protected. Here are a few ways an MCA attorney can support your New York business:

1. Review contracts

MCA attorneys review MCA agreements to ensure terms are fair and legally compliant, advising clients on potential risks and benefits including the use of UCC liens, enforcement, and litigation.

2. Negotiate and restructure MCA terms

They assist in negotiating with MCA providers to restructure terms, often seeking more favorable conditions for the business owner—including lower payments, longer repayment terms, or an outright settlement.

3. Defend against predatory practices

They flag non-compliant or predatory practices by the provider, and seek redress on behalf of your business—including filing a countersuit if the MCA has engaged in illegal conduct.

4. Legal representation in disputes

In cases of disputes or litigation related to MCAs, they represent and defend the interests of their clients, addressing issues like contract breaches, predatory lending practices, and lawsuits filed by MCA attorneys.

5. Help avoid costly mistakes

A merchant cash advance debt relief attorney can help mitigate MCA risks by reviewing contracts before you sign, identifying hidden fees, advising on whether an MCA is the right financing option, and ensuring your agreement complies with New York’s disclosure requirements.

Top Signs You Might Need a New York 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 Confession of Judgment (COJ) upon accepting the MCA.
• 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 or MCA attorneys 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 customers or vendors directly.
• You’re considering stacking multiple MCAs to cover an existing advance.

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 New York 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 the information your business deserves to make an informed decision on what to do with your MCA debt. We never sell or share your information, and calls are never outsourced. All conversations are confidential.

FAQs About Merchant Cash Advance Attorneys in New York

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

If you want to stop paying an MCA, there are a few ways to go about it. For example, you could refinance your debt into a fixed-rate installment loan. Or if your financial situation is more dire, you could negotiate a settlement or even file for bankruptcy. You can’t get out of the agreement by simply ignoring it.

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

If you don’t pay back an MCA, the consequences can be serious. The MCA provider may pursue aggressive legal action in New York to recover the owed amount. Additionally, since many MCA agreements include a personal guarantee, your personal assets and credit might be at risk. The MCA provider may also engage in aggressive collection practices—calling you, your family, and/or your customers. It’s important to seek legal advice if you’re struggling to make payments, as ignoring the issue can make things worse.

What is the role of a New York merchant cash advance debt help attorney?

A New York merchant cash advance attorney offers legal advice and representation to merchants and businesses in matters related to cash advance, factoring, and funding agreements. They ensure the terms are fair, lawful, and protect the merchant’s interests, assets, and business reputation. They can also help resolve disputes related to merchant cash advances where the merchant is being threatened.

Why might a business need a merchant cash advance attorney in New York?

A business might need a New York merchant cash advance attorney to provide legal guidance in securing an MCA or dealing with any issues that may arise post-agreement, including managing repayment terms, confronting unexpected charges, or resolving potential disputes with the lender.

How to choose the right merchant cash advance attorney in New York?

Choosing the right merchant cash advance debt relief attorney in New York involves thorough research to ensure they have significant experience in this domain. Consider their success rates, client testimonials, and dialogue with them to ensure they fully understand your business needs and financial situation. Make sure they possess a deep understanding of New York’s regulations and laws surrounding merchant cash advances and have extensive experience negotiating and working on these cases. You don’t want to be a test case.