Tennessee Merchant Cash Advance Attorney

What Is a Merchant Cash Advance?

A merchant cash advance is a form of financing where a business receives a lump sum of money in exchange for a portion of its future receivables. It is not a loan in the traditional sense, but rather an advance based on the sales revenue of the company.

The MCA provider gives the business an upfront sum of cash, and in return, the business agrees to pay back this advance, plus fees, through a percentage of its daily or weekly debit/credit card sales. Instead of a fixed monthly payment, the amount paid back fluctuates with the business’s sales volume—higher sales mean faster repayment, while slower periods reduce the payment amount.

Rather than a traditional interest rate, MCA companies charge a factor rate, usually ranging from 1.1 to 1.5, which is multiplied by the advance amount to determine the total repayment amount. For example, if your advance is $50,000 with a factor rate of 1.4, you’d pay back a total of $70,000—the original $50,000 advance plus $20,000 in fees.

Because of this pricing structure and the short repayment timeline, MCAs can be much more expensive than traditional financing options, sometimes translating to effective APRs well above 100%.

Legality of Merchant Cash Advances in Tennessee

Merchant cash advances are a legal source of funding in Tennessee. Because they are structured as commercial transactions rather than loans, MCAs generally fall outside the purview of usury laws and banking regulations that typically govern interest rates and lending practices. This is why it’s crucial to understand the state laws and rights that exist for MCA customers.

Tennessee’s MCA Regulatory Landscape

Tennessee does not have any specific MCA regulations. However, companies offering MCAs are still required to adhere to the state’s broader financial and consumer protection statutes. A few protections worth knowing:

• Usury laws: Charging interest rates above 10% could be deemed criminal usury in Tennessee. It’s common for MCA effective rates to surpass this threshold significantly—though because MCAs are classified as a purchase of receivables rather than a loan, they often fall outside the reach of these laws.
• Deceptive trade practices: Employing deceit or false statements to encourage borrowing is unlawful in Tennessee.
• Unfair collection practices: It is illegal for lenders to engage in harassment of borrowers or to misrepresent the nature of debts.

Additionally, New York’s 2019 law prohibits New York-based MCA funders from filing a Confession of Judgment (COJ) against out-of-state borrowers, including those in Tennessee. However, MCA funders based in other states may still attempt to use COJs filed in states that permit them.

Although the absence of direct MCA regulation in Tennessee results in fewer safeguards, working with an experienced business debt relief attorney can help you leverage existing legislation effectively to combat exploitative lending behaviors.

5 Ways MCA Attorneys Help Your Tennessee Business

A merchant cash advance attorney plays a critical role in navigating the complex landscape of MCAs. They offer legal expertise and protection to businesses that either have an MCA or are considering one. Here are a few of the ways an MCA attorney can support your Tennessee business:

1. Review and advise on MCA contracts

An MCA attorney can review your MCA agreement to ensure it’s fair and legal, advising your business on the terms and conditions—including the factor rate, repayment terms, and any clauses that could affect you negatively. They can also identify potentially predatory terms before you sign.

2. Negotiate more favorable terms

An experienced attorney can attempt to negotiate more favorable terms on behalf of your business, including lower payments, a longer repayment timeline, or a reduced total amount owed.

3. Resolve disputes and represent you in litigation

If disputes arise between you and an MCA provider, an attorney can represent your business in negotiations or litigation—including situations where the terms of the agreement were not honored or where predatory lending practices are suspected.

4. Restructure debt or negotiate a settlement

For businesses struggling to meet the terms of their MCA, attorneys can assist in restructuring the debt or negotiating a settlement. This can involve adjusting the repayment schedule, reducing the total amount owed, or exploring alternative financing solutions.

5. Help you avoid costly mistakes

An MCA debt relief attorney can help mitigate risk by thoroughly reviewing any contracts you’re considering, highlighting potential issues, and providing representation and advice if any disputes or litigation arise.

Top Signs You Might Need a Tennessee 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 assets.
• The MCA lender is contacting your customers or vendors directly.
• You’ve been sued by an MCA provider for breach of contract.
• You believe the terms of your MCA are illegal, predatory, or were misrepresented to you.

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 Tennessee MCA Debt Relief

Tayne Law Group is a New York-based law firm, but we work with clients from across the U.S. So if you’re based in Tennessee and struggling with merchant cash advance debt, we may be able to assist.

Our team is made up of experienced attorneys who resolve MCA debt every day. We’ll work with you to come up with a customized approach to resolving your merchant cash advance debt—and other types of business debt, too. We strive to protect your business cash flow and operations while negotiating the best possible outcome with your MCA provider.

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

FAQs About Merchant Cash Advance Attorneys in Tennessee

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

Getting out of an MCA contract can be challenging, but there are several strategies to consider. You may be able to negotiate directly with your MCA provider for more favorable repayment terms, pursue a lump-sum settlement for less than what’s owed, or restructure the debt with the help of an attorney. In more serious situations, bankruptcy could be an option—though it comes with significant financial consequences. An MCA attorney can evaluate your situation and recommend the right path forward.

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

There can be significant repercussions to not paying back an MCA. The cost of the advance may increase due to late fees and penalties. The MCA provider will likely escalate collection efforts, and in cases of continued non-payment, may pursue UCC liens and/or legal action to recover the debt. If a personal guarantee was part of the agreement, a court judgment could put your personal assets at risk as well.

What is the role of a Tennessee merchant cash advance attorney?

A Tennessee merchant cash advance attorney can offer legal advice and representation to merchants and business owners in matters related to cash advance agreements. They ensure the MCA terms are fair, lawful, and protect the merchant’s interests and the business owner’s personal assets. They can also help resolve disputes related to MCAs.

Why might a business need a merchant cash advance attorney in Tennessee?

A business might need a Tennessee MCA attorney to provide legal guidance in securing a merchant cash advance 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 Tennessee?

Choosing the right merchant cash advance attorney in Tennessee involves thorough research to ensure they have significant experience in this domain. Consider their success rates, client testimonials, and conversations with them to ensure they fully understand your business needs and have a deep understanding of the laws surrounding MCAs—both in Tennessee and in whatever state your MCA agreement specifies as governing law.