Texas Merchant Cash Advance Attorney

What Is a Merchant Cash Advance?

A merchant cash advance is a type of financing in which a business receives a lump sum of cash in exchange for a percentage of future sales. The amount the business receives is based on the company’s projected future growth and revenue. The advance is then repaid, with fees, over a short period—generally a few months to a couple of years.

Payments are typically deducted each day from the business bank account. The amount of that payment is based on the holdback rate, which is the percentage of your daily sales that are withheld. Holdback rates tend to range from 5% to 20%. As your revenue increases or decreases, so do your payments. In some cases, your MCA agreement might call for fixed weekly payments based on your estimated monthly revenue—more common for businesses that don’t have regular debit/credit card sales.

Instead of a traditional interest rate, MCA providers charge a factor rate—generally around 1.1 to 1.5. To calculate the total dollar cost of an MCA, multiply the amount borrowed by the factor rate. For example, if you get an advance of $30,000 with a factor rate of 1.4, you’d pay back a total of $42,000, including $12,000 in fees. Because MCAs are not loans, they are not subject to the same rules and regulations as traditional Texas small business loans.

Legality of Merchant Cash Advances in Texas

Yes, merchant cash advances are legal in Texas. There are no laws that render a merchant cash advance contract illegal in the state.

Texas’s MCA Regulatory Landscape

MCAs are notoriously challenging for business owners for a few reasons, one of the biggest being that they often operate as loans in disguise and are pushed as loans by brokers. However, MCAs are legally not loans at all, but rather an advance on future receivables.

There are usury laws in Texas to prevent lenders from charging excessively high interest rates—but those laws apply to loans, not MCAs. So MCA companies are able to get around these laws and charge exorbitant fees. They are also not consumer-focused and don’t have to follow the Fair Debt Collection Practices Act.

One important nuance for Texas business owners: if you read your MCA agreement carefully, it’s likely the governing law is not Texas law. Many MCA agreements specify New York, Utah, Virginia, or Connecticut as the controlling jurisdiction. This means while you live and work in Texas and the funding took place in Texas, the law your MCA has to follow may be from another state entirely. You’ll need an experienced attorney who is familiar with wherever the agreement specifies.

One meaningful protection Texas business owners do have: New York’s 2019 law bans New York-based MCA funders from issuing a Confession of Judgment (COJ) to an out-of-state borrower—including Texas residents. A COJ is a provision in many MCA contracts where a borrower agrees to give up their right to a trial or hearing and allows a lender to obtain a judgment against them without any notice or opportunity to defend themselves in court. Today, if a Texas business owner takes out an MCA from a New York-based funder, that funder cannot issue them a COJ. However, funders based in other states may still include COJ clauses, so reviewing your agreement carefully remains critical.

5 Ways MCA Attorneys Help Your Texas Business

If you’re struggling with MCA debt in Texas, working with an experienced attorney can make a significant difference. Here are a few of the key ways a Texas MCA attorney can help:

1. Review and advise on MCA contracts

An MCA attorney will review your agreement—including the governing law clause, factor rate, holdback rate, COJ provisions, and personal guarantee—to identify any terms that are illegal, predatory, or put you at unnecessary risk.

2. Negotiate better terms or a settlement

An experienced attorney can negotiate with your MCA provider on your behalf to secure more favorable repayment terms, reduce the total amount owed, or reach a lump-sum settlement for less than what’s outstanding.

3. Defend against lawsuits and legal action

If the MCA provider files a lawsuit or pursues a judgment against your business, an MCA attorney can represent you in court, file a response, and work to protect your assets and business operations.

4. Resolve UCC liens and frozen accounts

If an MCA funder has filed a UCC lien against your business or frozen your bank accounts, an attorney can work to challenge or remove those encumbrances.

5. Navigate debt restructuring and relief options

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

Top Signs You Might Need a Texas MCA Attorney

Whether your MCA payments are placing strain on your business, you’re being harassed by debt collectors, or you’ve been sued by a merchant cash advance provider, you should get the help of an experienced MCA attorney right away. Here are a few signs you need legal assistance:

• You are struggling to make payments on your MCA.
• You are being harassed by debt collectors with threatening calls, texts, or emails.
• You have been hit with unexpected fees and balances that are more than you expected.
• You suspect that you were lied to by an MCA broker.
• You are facing legal action from an MCA provider.
• Your MCA contract included a personal guarantee.
• Your MCA contract included a Confession of Judgment (COJ).
• There is a UCC lien filed against your business.
• Your business or personal bank accounts have been frozen.
• Your clients, family, or vendors are being contacted by MCA lenders.

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 Texas MCA Debt Relief

If you’re struggling with MCA debt in Texas, Tayne Law Group can help. We’re headquartered in New York, but we work with clients all around the country—and even the world. Our experienced MCA debt help attorneys will work closely with you on a solution to resolve and eliminate MCA debt (as well as other types of business debt). We always keep your best interests and budget in mind, customizing a plan that protects your business operations and cash flow, and we never outsource any of our work.

Our law firm is accredited by the Better Business Bureau and has an A+ rating. We’ve also been voted ‘Best Debt Consolidation Service’ for 10 years in a row.

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 Texas

Is a business loan or MCA helpful or dangerous?

Both can be helpful or dangerous depending on how they’re used. MCAs provide fast access to capital but come with high fees and short repayment timelines that can strain your cash flow. Traditional business loans generally have lower costs and more borrower protections, but stricter eligibility requirements. An attorney can help you evaluate which option makes sense for your business—and review the terms before you sign.

What happens if I default on an MCA?

Defaulting on an MCA can trigger significant consequences, including late fees and penalties, escalated collection efforts, UCC liens against your business assets, frozen bank accounts, and a lawsuit. If you signed a personal guarantee, your personal assets may be at risk as well. Seeking legal help early—before default—is always the better move.

How do I settle my MCA debt?

MCA debt settlement involves negotiating with the funder to accept a lump-sum payment for less than the full balance owed. The best outcomes typically come from working with an experienced MCA attorney who has established relationships with MCA providers and their legal teams.

When should I get help with my merchant cash advance or business loans?

The sooner, the better. If you’re struggling to make payments, being contacted by debt collectors, or facing any kind of legal action, contact an MCA attorney right away. Waiting makes your options more limited and the situation more expensive to resolve.

What if I get sued by an MCA provider?

Do not ignore a lawsuit. You typically have 20–30 days to respond after being served. Failing to respond results in a default judgment, which allows the MCA provider to freeze accounts and seize assets without further court proceedings. Contact an MCA attorney immediately so they can file a response and represent your interests.

What merchant cash advance creditors do you work with?

After more than 20 years in debt relief, Tayne Law Group has established relationships with a wide range of MCA lenders and their legal teams. You can view a list of MCA lenders we work with on our website.