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If you own a business in Ohio, you have probably heard of a merchant cash advance (MCA). Maybe you even have one. This increasingly popular financing option is attractive to small businesses in need of fast cash, especially those that may not qualify for a traditional bank loan.
However, MCAs come with high fees and short repayment timelines, making them one of the costliest sources of funding for Ohio business owners.
Whether you’re considering taking on an MCA, struggling with existing MCA debt, or even facing a lawsuit from an MCA provider, an Ohio merchant cash advance attorney can help you navigate the complexities of this industry and ensure your business and personal finances remain intact. Here’s what you should know about working with an Ohio MCA attorney.
It’s important for small business owners in Ohio to be aware of how MCAs work and their potential risks. While this form of funding is often fast and convenient, that convenience and accessibility comes at a price. 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.
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.
Once approved for an MCA, the merchant receives a lump sum payment. The amount is based on the MCA provider’s assessment of the business’s future credit sales.
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 repayment period typically ranges from a few months to a year.
The percentage of sales taken to repay the advance is known as the “holdback rate.” It varies by provider but usually ranges between 10% and 20% of daily credit card receipts.
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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.
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.
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’s a closer look at what MCA attorneys do:
An an Ohio business owner, the role of an MCA attorney can be critical for several reasons:
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 MCA’s. We’ve helped countless small businesses with a customized, manageable plan to tackle their MCA debt and get back on track.
Receive a free phone consultation to learn more about our services 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.
Hiring an MCA debt help attorney involves several steps to ensure you find the right legal representation:
There are several common mistakes that Ohio business owners should avoid when dealing with MCAs:
An MCA debt relief attorney can play a crucial role in helping business owners navigate the complexities of merchant cash advances and mitigate the associated risks. They provide valuable legal guidance by thoroughly reviewing MCA agreements, identifying hidden fees, and may be able to negotiate more favorable terms on behalf of the business owner. MCA attorneys also assess the potential risks and advise Ohio business owners on whether an MCA is the right financing option for their needs.
In case of disputes, MCA attorneys represent the debtor’s interests and work to achieve the best resolution possible. They also assist businesses facing financial distress by exploring debt relief and restructuring options that can help avoid being sued and having UCC liens filed.
After more than 20 years of working solely in debt relief, Tayne Law Group has established healthy and long-lasting relationships with business lenders, creditors, and merchant cash advance lenders and companies. Because we’re a law firm, our process is respected, which, in the end, saves you time and money.
The owner of a cheerleading gym came to us as a borrower with $19,028.12 on an MCA with Lendini. She was dealing with other cash advances at the time, and this account became too much to handle.
The owner of a plumbing business was never paid on a big contract. To keep up with the bills he got an MCA with QuarterSpot. When he couldn’t pay the $72,230.64 balance, he became a client.
Getting out of paying a merchant cash advance (MCA) can be challenging and may have legal and financial consequences. However, there are several options, including debt settlement.
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.
MCA providers typically charge factor rates between 1.1 to 1.5. To find out the cost of an MCA, multiply the factor rate by the amount you’re borrowing.
Restructuring a merchant cash advance (MCA) involves negotiating with the MCA provider to modify the terms of the agreement. It’s advisable that you work with a reputable MCA attorney to negotiate on your behalf since the contract does need to be rewritten.
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.
An Ohio merchant cash advance attorney can provide legal assistance in understanding complex cash advance agreements, ensuring you’re not falling victim to predatory lending practices. They protect your rights, help negotiate terms, and can provide valuable legal advice related to your MCAs.
A business should engage an Ohio merchant cash advance attorney when they’re looking to obtain a merchant cash advance, 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.
The average cost of hiring an Ohio merchant cash advance attorney can vary widely, depending on the complexity of the case and the experience of the attorney. Fees typically range from $200 to $500 per hour. However, some attorneys may also work on a flat-fee basis or a contingency fee arrangement.
Yes, there are specific legal issues related to merchant cash advances in Ohio that an attorney could assist with. These include compliance with state laws, contractual disputes, and issues related to collections and debt recovery.
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