Ohio Merchant Cash Advance Attorney

What Is a Merchant Cash Advance?

A merchant cash advance is a form of business financing where a company receives a lump sum of money in exchange for a percentage of its future credit card sales. An MCA provides immediate access to funds. However, it’s not a loan in the traditional sense but an advance against future sales. This business financing option 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 fees involved can translate into annual percentage rates (APRs) that are much higher than those of traditional loans, sometimes exceeding 100%. This makes MCAs one of the most expensive financing options.

Once approved for an MCA, the merchant receives a lump sum payment. Repayment terms involve a daily or weekly deduction from the business’s bank account until the advance, plus a fee, is paid back. The fee, referred to as the factor rate, is predetermined and can significantly increase the total amount to be repaid. The percentage of sales taken to repay the advance is known as the “holdback rate,” which varies by provider but usually ranges between 10% and 20% of daily credit card receipts.

Legality of Merchant Cash Advances in Ohio

Merchant cash advances are not considered loans. Instead, they’re an advance on future receivables. So MCAs aren’t regulated the same way that banks are, and there is very little oversight of the MCA industry compared to banking. That’s why it’s crucial to understand the local laws that apply to MCAs and work with an attorney who is familiar with the regulations in Ohio.

Ohio’s MCA Regulatory Landscape

You might be surprised to learn that there’s no licensing requirement to become an MCA purchaser or broker who may solicit you for such funds in Ohio. In fact, there are few regulations at all that apply to MCA providers. This has led to issues such as sky-high interest rates and predatory lending practices on the part of MCA funders.

Some states are taking a closer look at the MCA industry and putting laws in place to protect businesses. New York, for example, instituted a law that requires New York non-bank lenders (including MCAs) to provide corporate borrowers specific disclosures, both in the paperwork and before finalizing the funding. However, no such law exists in Ohio yet.

One important protection for Ohio businesses: a 2019 New York law prohibits New York-based MCA funders from filing a Confession of Judgment (COJ) against out-of-state borrowers, including those in Ohio. However, MCA funders have responded by filing COJs in other states like Texas, Illinois, and Utah that still permit them. If your MCA contract contains a COJ clause, an attorney can review your specific exposure and options.

5 Ways MCA Attorneys Help Your Ohio Business

MCA attorneys are specialized legal professionals who play an important role in the MCA process for Ohio business owners. A reputable attorney with extensive experience in dealing with MCA matters can offer expert legal advice, ensure compliance with laws, negotiate the terms of an MCA contract, and help resolve disputes. Here are a few ways an MCA attorney can support your Ohio business:

1. Review contracts and advise on terms

They review MCA agreements for business owners, advising them on the terms and potential risks. They can also negotiate with MCA providers on behalf of the business to secure more favorable terms.

2. Defend against predatory practices

If a business owner finds themselves facing unfair or predatory terms, an MCA attorney may be able to provide defense and representation. They help businesses navigate disputes, seek adjustments to repayment terms, or address instances of legal non-compliance by the MCA provider.

3. Restructure MCA debt

For businesses struggling with MCA debt, these attorneys can assist in restructuring the debt. This might involve negotiating with the MCA provider for lower payments or longer repayment terms to alleviate cash flow issues.

4. Represent your business in litigation

They play a key role in resolving disputes between MCA providers and borrowers, which can prevent expensive litigation and help your business continue operating as normal. If sued, they can represent you in court and help you mount an effective defense.

5. Advise on bankruptcy and insolvency

If a business is facing insolvency due in part to burdensome MCA repayments, MCA attorneys can advise on bankruptcy options including Chapter 7 and Chapter 13, and how to manage MCA debts in such situations.

Top Signs You Might Need an Ohio 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 payments.
• You’ve missed multiple MCA payment dates and need to renegotiate.
• You have debt collectors from the MCA demanding payment.
• You’ve received notice that the provider filed a UCC lien against your business.
• The MCA lender is contacting your clients or threatening legal action.
• You’ve been sued or received notice of a lawsuit from an MCA provider.

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 Ohio MCA Debt Relief

As an Ohio small business owner, it can be disheartening to see how a merchant cash advance can adversely impact your operations when repayment becomes unmanageable. Having an experienced attorney in your corner who works regularly with MCA debt relief can help your business regain stability so you can focus on moving forward.

If you’re struggling with MCA payments, or are at risk of defaulting on an MCA debt, you need a trustworthy legal team at your side. 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. After more than 20 years of working solely in debt relief, we have established healthy and long-lasting relationships with business lenders, creditors, and MCA companies. Because we’re a law firm, our process is respected, which, in the end, saves you time and money.

Receive 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. All information shared during the conversation is confidential, and your information will never be sold to a third-party.

FAQs About Merchant Cash Advance Attorneys in Ohio

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

Getting out of paying a merchant cash advance can be challenging and may have legal and financial consequences. However, there are several options, including debt settlement, restructuring the agreement, or—in serious situations—bankruptcy. Consulting with an experienced MCA attorney is the best first step.

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

Failure to repay merchant cash advances can lead to penalties, collection efforts, and potential legal actions, such as UCC liens or lawsuits, which can mean trouble for your business as well as your business credit and bank account.

What exactly does an Ohio merchant cash advance attorney do?

An Ohio merchant cash advance attorney represents businesses in Ohio that are securing cash advances from lenders. They help negotiate terms, ensure legal compliance, and protect the business’s interests during the transaction. If you’re already struggling with MCA debt, they can negotiate on your behalf, represent you in court, and help resolve the matter.

When should a business engage an Ohio merchant cash advance attorney?

A business should engage an Ohio merchant cash advance attorney when they’re looking to obtain an MCA, or if they’re facing legal issues related to an existing advance. Ohio MCA attorneys help navigate the complex legal terrain, ensuring businesses understand the conditions of the agreement, protect their rights, and avoid potential pitfalls or unfavorable terms.

Are there specific legal issues in Ohio related to MCAs that an attorney can help with?

Yes. These include compliance with state laws, contractual disputes, issues related to collections and debt recovery, and defending against lawsuits filed by MCA funders. Although Ohio has no MCA-specific statutes, general contract law, UCC provisions, and federal protections may still provide avenues for relief. Call us at (866) 890-7337 to discuss your situation.