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.

Understanding Merchant Cash Advance

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.

Definition of 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.

How do Merchant Cash Advances Work?

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.

Legalities 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.

Governing Laws of Ohio on Merchant Cash Advances

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.

Role of a Merchant Cash Advance Attorney

MCA attorneys are specialized legal professionals who play an important role in the MCA process for Ohio business owners. 

What Does a Merchant Cash Advance Attorney Do?

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:

• Contract review and negotiation: 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 seller to secure more favorable terms.
• Defense 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.
• Debt restructuring: 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.
• Bankruptcy and insolvency issues: 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 bankruptcy, and how to manage MCA debts in such situations.

Importance of Merchant Cash Advance Attorney in Ohio

An an Ohio business owner, the role of an MCA attorney can be critical for several reasons:

• Protecting interests: They ensure that contracts are fair and compliant with laws, protecting the interests of their clients.
• Navigating legal system: They navigate the legal complexities of MCAs, which can be daunting for borrowers.
• Conflict resolution: 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 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.

Process of Hiring a Merchant Cash Advance Attorney in Ohio

Hiring an MCA debt help attorney involves several steps to ensure you find the right legal representation:

1. Research attorneys: Look for attorneys that specialize in debt relief and MCA matters. 
2. Check credentials and experience: Look for attorneys who have a track record of success in representing businesses similar to yours and who are familiar with relevant state and federal laws.
3. Schedule consultations: Once you’ve identified potential attorneys, schedule initial consultations to discuss your case and assess their suitability for representing you. During these consultations, ask about the attorney’s experience, approach to handling cases, and fees.
4. Ask questions: Prepare a list of questions to ask the attorney during the consultation, such as:

• How many years of experience do you have in representing businesses with merchant cash advance issues?
• Have you handled cases similar to mine before, and what were the outcomes?
• What is your strategy for resolving my case, and what are the potential outcomes?
• How do you charge for your services, and what are your fee structures?
• Will you be personally handling my case, or will it be delegated to other staff members?

5. Evaluate your compatibility: Consider the rapport between you and the attorney during the consultation. You should feel comfortable communicating with the attorney and confident in their ability to represent your interests effectively.

Common Mistakes to Avoid When Using a Merchant Cash Advance

There are several common mistakes that Ohio business owners should avoid when dealing with MCAs:

• Not understanding the terms: It’s crucial to carefully review the terms of your MCA agreement, including the factor rate, repayment structure, fees, and any other terms and conditions. Make sure you understand how much you’ll be paying back and when.
• Taking on more than you can afford: It’s important to take only what you need and can afford to repay. Taking on too much debt with an MCA can put a strain on your cash flow and lead to financial difficulties down the road. 
• Failing to compare options: Don’t settle for the first MCA offer you receive. Shop around and compare offers from multiple MCA providers to find the best terms and rates. Look for transparent pricing, favorable repayment terms, and reputable lenders with a track record of fair practices.
• Not considering alternatives: While MCAs can be a quick source of funding, they often come with high fees and steep repayment terms. Before committing to an MCA, explore other financing options such as traditional business loans from a traditional bank or SBA loans and lines of credit.
• Failing to read the fine print: Always read the fine print of the MCA agreement before signing. Pay attention to any hidden fees, penalties, or restrictions that may impact your ability to repay the advance. If anything is unclear, ask the provider for clarification before proceeding.

How a Merchant Cash Advance Attorney Can Help Mitigate These Mistakes

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. 

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 (MCA) can be challenging and may have legal and financial consequences. However, there are several options, including debt settlement.

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 is the average cost of a merchant cash advance?
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. 

How do you restructure an MCA?
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.

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.

How can an Ohio merchant cash advance attorney help me?
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.

When should a business engage an Ohio merchant cash advance attorney, and why?
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.

What is the average cost of hiring an Ohio merchant cash advance attorney?
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.

Are there specific legal issues in Ohio related to merchant cash advances that an attorney could assist with?
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.