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Merchant cash advances are an increasingly popular form of financing and funding for small businesses, including Virginia small business owners. They promise fast cash — even with not-so-great credit — that can be used to pay for major expenses like equipment and inventory or fill the gap when cash flow is strained or unpredictable lately.
Unfortunately, many business owners find that merchant cash advances aren’t as convenient and easy as they thought. With high fees and daily withdrawals from your receivables, an MCA can strain your business and personal finances even more. It’s not uncommon for Virginia business owners to find themselves behind on payments and even facing legal issues.
If that’s the case, it’s important to work with an experienced MCA attorney who can handle Virginia merchant cash advance legal matters. A Virginia merchant cash advance attorney can help you navigate the world of merchant cash advance contracts and UCC liens. They can also help resolve any issues you face with MCA debt, like litigation when you’re being sued in Virginia.
A merchant cash advance (sometimes called a credit card processing loan) is a type of alternative business financing. Though it might seem like a loan, an MCA is technically not a loan. Rather, it’s an advance on your future credit card sales (or other revenue). When you take out an MCA, the provider buys a portion of your receivables and gives you the money upfront. Then, you pay back the advance over a fairly short time- anywhere from 3 to 18 months — plus fees.
MCA payments are usually deducted every day from your business bank account. The amount deducted is based on the holdback rate, the percentage of your daily sales withheld as payment to the MCA funder. It typically ranges from 5% to 20%. As your revenue increases or decreases, so do your payments. However, you could find yourself in overdraft with bounced payments due to an MCA withdrawing money regularly from your account.
Sometimes, your MCA may instead require fixed weekly payments based on your estimated monthly revenue. This is more common for businesses that don’t have many debit or credit card sales.
Merchant cash advance providers also charge a “factor rate” instead of the usual interest rate on a traditional bank loan. Factor rates for MCAs are around 1.1 to 1.5, depending on the expected performance of the business. Higher-risk companies usually pay a higher rate. 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 $42,000, including $12,000 in fees.
Yes, merchant cash advances are legal in Virginia. There currently aren’t any laws that render a merchant cash advance contract illegal in the state. Merchant cash advances are a form of alternative financing and funding for businesses, and in Virginia, they are not considered loans.
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One of the biggest criticisms of merchant cash advances is that they are basically loans in disguise. Virginia’s usury laws prevent lenders from charging excessively high-interest rates. But because MCAs are technically not loans, MCA providers can skirt these laws and charge as much as they want, costing the small business owner thousands of dollars to fund these agreements.
However, some states have been instituting new MCA regulations to prevent this type of predatory lending. Virginia was actually the second state to legally require MCA providers to adhere to special rules that help protect merchants. And unlike other states that have passed new laws that broadly cover financing companies, Virginia took direct aim at merchant cash advance providers and brokers.
Under the new law, providers of “sales based financing”- including MCA companies- must provide upfront disclosures about certain financing terms. Those include the total amount borrowed, financing cost, estimated number of payments, total repayment amount, and more. MCA providers are also required to follow certain dispute-resolution procedures. Under this new set of rules, Confession of Judgment (COJ) provisions are prohibited. If legal action is taken, it must be brought in Virginia.
If you are struggling with MCA payments or have defaulted on the advance repayment agreement, it’s a good idea to enlist the help of an attorney. Here are a few signs you need legal assistance:
If you’re struggling with MCA debt in Virginia, we can help. Our headquarters may be in New York, but Tayne Law provides legal help to clients across the U.S. and even globally. Our process is straightforward and transparent. Plus, our experienced MCA attorneys will work with you on customized solutions that help eliminate merchant cash advance debt (as well as other types of business debt), all while protecting your business cash flow and operations.
Tayne Law Group is accredited by the Better Business Bureau and has a rating of A+. We also earned the ‘Best Debt Consolidation Service’ for 9 years running.
If your business is burdened by MCA debt, knowing where to turn for help can be difficult. Tayne Law Group, P.C. is an award-winning law firm and a trusted source of assistance. Our team of knowledgeable debt relief attorneys can help you get your business back on track and out of debt for good. Call us for a free consultation at 866-890-7337 or fill out our short contact form. All conversations are confidential; we will never share or sell your information.
If you’re struggling with MCA debt in Virginia, we can help. Our headquarters may be in New York, but Tayne Law provides legal help to clients across the U.S. and even globally. Our process is straightforward and transparent. Plus, our experienced MCA attorneys will work with you on customized solutions that help eliminate merchant cash advance debt (as well as other types of business debt), all while protecting your business cash flow and operations.
Tayne Law Group is accredited by the Better Business Bureau and has a rating of A+. We also earned the ‘Best Debt Consolidation Service’ for 9 years running.
In this initial conversation, we’ll ask questions to better understand your financial situation and learn more about your business debt. Once we get to know you better, we can explain how we can help and discuss our no-billing policy.
When you decide to hire us, we’ll start working on your file as soon as you make your first payment. You won’t have to worry about fielding calls, emails, or texts from MCA debt collectors or MCA attorneys once we are involved, as we’ll take over all communications with your creditors.
Our team will contact your creditors to notify them that you’re ready to resolve your debt. Our debt relief attorneys are skilled negotiators and have established relationships with many creditors and their legal teams. We know what it takes to secure a deal that works with your budget. And our office does all the work; we never outsource to third parties who don’t know you or your business.
As we work toward a final resolution with your creditors, we’ll provide updates along the way. We have an open-door policy, which means you can call any time. In the meantime, you’ll have the breathing room to focus on keeping your business running.
If your business is burdened by MCA debt, knowing where to turn for help can be difficult. Tayne Law Group, P.C. is an award-winning law firm and a trusted source of assistance. Our team of knowledgeable debt relief attorneys can help you get your business back on track and out of debt for good. Call us for a free consultation at 866-890-7337 or fill out our short contact form. All conversations are confidential; we will never share or sell your information.
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 local food market came to us with $58,000 in debt from his merchant cash advance loan with Everest Business Funding.
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.
It depends on if you can pay it off or not. It is definitely a risk.
When you are having trouble with business finances, limited resources, and credit, you may feel that a merchant cash advance or another business loan may be your only option to cover your business expenses.
Many people think they’ll pay off the loan with their next job or sale, but that’s not always a reliable solution. If that money doesn’t come in, you could end up doing more harm than good. MCAs often have very high interest rates, making them harder to pay off.
People who struggle with repayment or default on merchant cash advances could face lawsuits, judgments, UCC liens, frozen bank accounts, or other extreme actions taken by a creditor in these kinds of lending practices.
When you seek business MCA debt relief with Tayne Law Group, know that you have a team of experienced professionals ready to assist and work with you to get you through the process of resolving these kinds of matters. MCA and other cash advance inventory purchases can end up strangling your business, especially if it’s out of control.
“Defaulting” means you haven’t made payments over an extended period of time. If you default on a merchant cash advance, it can be extremely damaging to your business. Defaulting on a loan could result in lawsuits, judgments, and liens from the lender and negative credit reporting to both business credit bureaus and consumer credit bureaus like Experian, Transunion, and Equifax. Unfortunately, this could put you out of business.
If you’ve defaulted or are struggling to make payments, our staff and attorneys are prepared to help you understand how to find relief from your merchant cash advance debts. Your first consultation is free, so we recommend calling us to learn how we could make a difference in your business.
Debt settlement involves negotiating to pay less than what you owe. In many cases, debt collectors are willing to do this because the collection process can be expensive, especially if they resort to suing you. Contact us to discuss options for settling MCA debt.
It’s never too early or too late to call. For many clients, the scariest part is not knowing what’s going to happen. In our free consultation, we’ll discuss your situation, and explain what you can expect, not only from your creditor during this time but also in our debt relief process. Once you’re a client, our staff and debt relief attorneys will create a strategy for how we can help you free up your cash flow and resolve your debt. Call us today at (866) 890-7337 or schedule your free consultation to learn more.
We work with several business creditors and lenders to resolve debt. Here’s a list of some of the more known creditors we work with:
Call to find out if we work with your creditor, (866) 890-7337.
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