If you’re a small business owner in Georgia, you’ve probably explored many different financing options. One increasingly popular source of financing you may have come across is a merchant cash advance (MCA).
This is a common source of financing among Georgia small business owners. An MCA can provide funds fast without a traditional credit check. And the funds can be used for just about anything, from buying equipment to covering payroll to filling the gap when cash flow gets tight.
The downside is that these seemingly attractive sources of money often come back to bite Georgia business owners. High fees, a short repayment timeline, and frequent withdrawals from your receivables mean an MCA can place even more strain on your business. It’s not uncommon for Georgia business owners to find themselves behind on payments and even face a breach of contract, which can result in legal repercussions such as being sued.
If that’s the case, working with an experienced attorney who understands how to handle Georgia merchant cash advance attorney-related matters is important. An attorney can help you navigate the world of merchant cash advance contracts, defaults, and UCC liens. They can help you resolve any issues you’re facing with MCA debt located in Georgia.
A merchant cash advance is a form of alternative financing for businesses targeted toward small to mid-sized companies that regularly conduct a significant volume of credit card transactions.
Instead of receiving a fixed loan amount and repaying it over time with interest, businesses receive an advance against their future credit card sales. That means that MCAs are not loans but advances on future receivables. So, they’re not subject to the same laws that govern traditional business loans or consumer debt.
An MCA provider or purchaser will give a business an upfront sum of money in exchange for a percentage of the business’s future credit card sales or receivables. The agreed-upon percentage (known as the holdback rate) is automatically deducted from the business’s daily or weekly sales until the advance, plus a fee, is paid back in full.
This fee, also known as the factor rate, is predetermined and effectively represents the cost of the advance. It’s not an interest rate but rather a flat fee that gets added to the borrowed amount. For example, if a business receives a $10,000 advance with a factor rate of 1.3, the business will have to repay $13,000 (the $10,000 advance plus a $3,000 fee).
The repayment period for MCAs is not fixed like that of traditional loans. Instead, the duration of the repayment period depends on the volume of the business’s credit card transactions and other income. If business is booming, the advance might be paid back sooner. On the other hand, if sales slow down, it might take longer to repay the advance. It could also cause challenges when meeting your day-to-day expenses since the MCA is paid first. Usually, however, MCAs must be repaid within a short period — anywhere from a few months to a couple of years.
An MCA may require fixed weekly payments instead, based on the business’s estimated monthly revenue. This is more common for businesses with few debit or credit card sales.
Yes, merchant cash advances are legal in Georgia. 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 for businesses, and in Georgia, they are not considered loans.
It’s important to note that a common clause in MCA contracts known as a Confession of Judgment (COJ) has been outlawed in some states. But COJs are still legal in Georgia. This allows a merchant cash advance provider to obtain a judgment against you if you breach your contract without ever notifying you of a lawsuit or allowing you to defend yourself in court. When a default judgment is obtained, the creditor can take additional measures to collect your debt, such as seizing assets or freezing your bank account.
Understanding Georgia MCA Laws
Georgia’s usury laws prevent lenders from charging excessively high interest rates. However, although merchant cash advances seem like loans, they technically are not. This is a loophole that MCA providers use to get around usury laws and charge as much as they want.
Some states have been instituting new MCA regulations to prevent predatory lending. Georgia, however, is not currently one of them. Interestingly, Georgia has laws to protect consumers from predatory lending, such as payday loans. The same is not true for businesses, though, and there are no specific regulations surrounding MCAs in Georgia.
Signs You Need a Georgia Merchant Cash Advance Attorney
If you are struggling with MCA payments or have defaulted on the advance, it’s a good idea to enlist the help of an experienced MCA attorney. Here are a few signs you need MCA legal help:
- The majority of your revenue is going toward daily MCA payments.
- You’re being harassed by calls and texts about your MCA.
- You defaulted on your Georgia MCA.
- You are being sued in Georgia by an MCA company.
- Debt relief companies have been calling you about MCA debt help.
- You signed a personal guarantee as part of your Georgia merchant cash advance agreement.
- There is a UCC lien filed against your business.
- MCA companies have contacted your vendors or customers.
- Your bank account was frozen.
- An MCA provider has sued you.
How Can Tayne Law Help With Georgia MCA Debt?
Tayne Law Group is based in New York. But don’t worry: We assist clients from all over the country and even the globe with their debt matters. So, if you’re based in Georgia and struggling with merchant cash advance debt, we may be able to assist.
As a law firm, you can trust our process for resolving MCA debt matters and know that everything about the 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 eliminating your merchant cash advance debt (we can help with other types of business debt, too). The goal is to protect your business cash flow and operations while working out a resolution with the MCA collection agency.
Our law firm is accredited by the Better Business Bureau and has a rating of A+. We also earned the ‘Best Debt Consolidation Service’ for ten years running, and our team has won many awards and accolades in the legal debt resolution arena.
Here’s how our services work:
- It starts with a free phone consultation. Before you pay anything, we spend some time discussing your situation. We’ll ask some questions to learn more about you, your business, and your debt goals. You’ll also have the opportunity to ask us questions, whether you want to know more about our firm, how billing works, etc. We can take this time to review potential options and explain our no-billing policy.
- You submit your first payment. Once you have a better understanding of our services and how we can help, the next steps are super simple to get started.
- We take over communications with creditors. Once you’re a client, you can breathe easy knowing you don’t have to field any more calls, texts, or emails from MCA providers or debt collectors — we take it from here. Our team will contact your creditors and let them know that we’re prepared to resolve your debt on your behalf. Our debt relief attorneys are skilled negotiators and have established relationships with many creditors and their legal teams. All work is done in-office; we never outsource client work to third parties.
- You are kept in the loop. As we work toward resolving your MCA debt, we’ll update you regularly and keep you posted on our progress. We have an open door policy, so you can call any time and speak to the same people as our team is well established.
Facing steep MCA payments or even a lawsuit from an MCA provider can be stressful. The good news is that as a Tayne Law Group client, you’ll have a strong team to support you and help you navigate MCA debt resolution. We are a trusted source of MCA legal help and employ a strong team of debt relief attorneys and support staff who know debt and how to resolve it. We’ll help you get your business and finances back on track.
Call us for a free phone consultation at 866-890-7337 or fill out our short contact form. All conversations are confidential; we will never share or sell your information.