Tennessee Merchant Cash Advance Attorney

If you’re a small business owner in Tennessee, you’ve probably heard of a merchant cash advance (MCA). This is an increasingly popular source of funding among Tennessee business owners who are in need of fast cash.

However, MCAs aren’t as great as they may seem on the surface. They come with high fees and short repayment timelines, which can strain your cash flow and negatively impact your business. If you encounter a breach of contract by missing a payment, you could even be sued by the MCA funder.

That’s why it’s important to work with an experienced merchant cash advance attorney in Tennessee. An experienced attorney can help you navigate MCA contracts, defaults, and UCC liens. They’ll work to help you resolve any issues you’re facing with MCA debt that is located in Tennessee. 

Understanding Merchant Cash Advances

As a business owner in Tennessee, it’s important to understand MCAs and how they can impact your business. An MCA can be a source of quick funding that may not be available through traditional business loans. This can be attractive for businesses with limited credit history or those in immediate need of cash. 

However, it’s important to be aware of the potential higher costs associated with MCAs compared to traditional loans. Plus, knowledge of the regulatory landscape in Tennessee regarding MCAs, which are not regulated the same way that bank loans are, is essential for making informed decisions.

Definition of 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 way it works is relatively straightforward: 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.

How do Merchant Cash Advances Work?

Repayment is unique for MCAs compared to traditional loans. Instead of a fixed monthly payment, the amount paid back fluctuates with the business’s sales volume. This means during times of higher sales, the business pays more toward the advance, and during slower periods, payments are reduced. Additionally, the repayment timeline is fairly short; MCAs are usually repaid within a few months to a couple of years at most.

Another key feature is that rather than a traditional interest rate, MCA companies charge a factor rate. This factor rate, usually ranging from 1.1 to 1.5, 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. That’s 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.

Legalities of Merchant Cash Advances in Tennessee

MCAs are generally not subject to the same regulatory framework as traditional loans or banking products because they are structured as commercial transactions rather than loans. This means that MCAs often fall outside the purview of usury laws and banking regulations that typically govern interest rates and lending practices—which is why it’s crucial to understand the state laws and rights that exist for MCA customers.

Governing Laws of Tennessee on Merchant Cash Advances

Merchant cash advances are a legal source of funding in Tennessee. However, the state does not have any specific MCA regulations. Nonetheless, companies offering MCAs are required to adhere to the state’s broader financial and consumer protection statutes. These include:

• Usury Laws: Charging interest rates above 10% could be deemed criminal usury (it’s common for MCA rates to surpass this threshold significantly).
• Deceptive trade practices: Employing deceit or false statements to encourage borrowing is unlawful.
• Unfair collection practices: It is illegal for lenders to engage in harassment of borrowers or to misrepresent the nature of debts.

Although the absence of direct MCA regulation in Tennessee might result in fewer safeguards, enlisting the services of an attorney, if necessary, can help you leverage existing legislation effectively to combat exploitative lending behaviors.

Role of a Merchant Cash Advance Attorney

A merchant cash advance attorney plays a critical role in navigating the complex landscape of merchant cash advances. They offer legal expertise and protection to businesses that either have an MCA or are considering one.

What Does a Merchant Cash Advance Attorney Do?

Some of the services that an MCA attorney can provide include: 

• Legal advice and guidance: An MCA attorney can advise your business on the terms and conditions of an MCA agreement, helping you understand the intricacies of the contract, including the factor rate, repayment terms, and any clauses that could affect the business negatively.
• Contract review and negotiation: An experienced lawyer can review your MCA agreement to ensure it’s fair and legal, as well as identify any potentially predatory terms. An attorney can also attempt to negotiate more favorable terms on behalf of your business.
• Dispute resolution and litigation: If disputes arise between you and an MCA provider, an attorney can represent your business in negotiations or litigation. This includes situations where the terms of the agreement were not honored, or where predatory lending practices are suspected.
• Debt restructuring and 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 finding alternative financing solutions.

Importance of Merchant Cash Advance Attorney in Tennessee

If you’re a Tennessee business owner considering an MCA, or struggling with an existing MCA, consider hiring an MCA attorney.

Process of Hiring a Merchant Cash Advance Attorney in Tennessee

If you’re thinking about hiring a Tennessee MCA attorney, it’s important to take the time to choose the right legal professional.

Things to Consider When Hiring a Merchant Cash Advance Attorney

There are several critical factors to consider to ensure you select an attorney who is well-equipped to meet your business’s needs:

• Experience and expertise: Look for an attorney with specific experience in dealing with merchant cash advances. They should have a deep understanding of the MCA industry—ask about their experience with cases similar to yours and their success rate in negotiating or litigating MCA issues.
• Familiarity with local laws: Since laws surrounding MCAs can vary significantly from state to state, it’s crucial to choose an attorney who is familiar with the local laws where the agreement is going to be enforced. That could be in Tennessee or another state, even though your business may be in Tennessee. 
• Reputation: Look for reviews, testimonials, and any professional accolades or recognitions they have received and number of years in business. 
• Communication: Your debt help attorney should be able to explain complex legal concepts in understandable terms and keep you informed about the progress of your case. During your initial consultation, evaluate how well they listen and respond to your concerns to get a sense of their communication style.
• Cost and billing structure: Understand any services fees including how the attorney’s fees and billing structure upfront. Some attorneys may charge by the hour, while others may offer flat-rate fees for certain services. Be sure you are clear about any additional costs, such as filing fees or expenses related to litigation. Compare the cost against the value they’re providing, especially considering the potential financial impact of their work on your business.
• Personal fit: Finally, it’s important that you feel comfortable working with the MCA debt relief attorney. The right debt help attorney should be someone you trust and feel confident in their ability to help you and your business through these challenges with the MCA you took.

Common Mistakes to Avoid When Using a Merchant Cash Advance

Taking out a merchant cash advance might seem like a quick and easy solution to getting funding for your business needs, especially because you usually don’t need to meet the rigorous criteria of conventional bank or SBA loans. However, the attractiveness of MCAs may be overshadowed by their high costs and complexity.

Before proceeding with an MCA, be sure you understand the risks and potential pitfalls. These include failing to review contract details in depth and overestimating your company’s ability to repay the advance. It’s a good idea to explore alternative financing methods before moving forward with an MCA. Additionally, keep in mind that accumulating multiple MCAs can put you into a cycle of debt that’s tough to break free from and could do more harm to your business than good.

How a Merchant Cash Advance Attorney Can Help Mitigate These Mistakes

An MCA debt relief attorney can help mitigate these risks by thoroughly reviewing any MCA contracts you’re considering and advising on the terms of the agreement, highlighting potential issues that can impact your business and you personally. They can also assist in negotiating better terms. Additionally, an MCA attorney can provide representation and advice if any disputes or litigation related to the MCA arises.

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

As a law firm, you can rest assured that everything about our process is transparent and straightforward. Our team is made up of experienced attorneys who resolve MCA debt every day. Our team will 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 agreement with your MCA provider. 

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 due to the nature of the agreement and the costs involved. However, there are several strategies you can consider. For example, you may be able to negotiate directly with your MCA provider for more favorable repayment terms. Debt restructuring or refinancing through traditional loans or SBA loans may also be an option. If the MCA terms are found to be unfair or in violation of the law, pursuing legal action could be a viable route. Alternatively, a lump-sum settlement for an amount less than what’s owed might be negotiated. In dire situations, bankruptcy could be a way to discharge or reorganize MCA debts, though it comes with significant financial consequences. 

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

There can be significant repercussions to not paying back an MCA. Initially, the cost of the advance may significantly increase due to late fees and penalties outlined in the MCA agreement. The MCA provider will also likely escalate collection efforts. In cases of continued non-payment, the provider may even pursue UCC liens and/or legal action to recover the debt, which could lead to a court judgment against the business or the owner, especially if a personal guarantee was part of the agreement. 

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

A Tennessee merchant cash advance attorney may be able to 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.

What kind of disputes or issues can a Tennessee merchant cash advance attorney help to resolve?

A Tennessee merchant cash advance attorney can help to resolve disputes related to repayment terms, interest rates, or collection practices. They can also address contractual issues, potential fraud, or instances of harassment from MCA providers.

How to choose the right merchant cash advance attorney in Tennessee?

Choosing the right merchant cash advance attorney in Tennessee involves thorough research to be sure they have significant experience in this domain. Consider a potential attorney’s success rates, client testimonials, and conversations with them to ensure they fully understand your business needs and have a deep understanding of the state’s regulations and laws surrounding MCAs.

What should one expect from a first consultation with a Tennessee merchant cash advance attorney?

During a first consultation with a Tennessee merchant cash advance attorney, you should expect the attorney to gain a thorough understanding of your financial situation, provide a detailed explanation of legal options, and discuss the potential costs and timeline for resolution.