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Merchant Cash Advance

Business Debt Law Group > Merchant Cash Advance

Are Merchant Cash Advances Legal?

Our lawyers here at the Business Debt Law Group are often asked a simple and straightforward question regarding merchant cash advances (MCAs). Are merchant cash advances legal? YES. Merchant cash advances are, in fact, legal. As of the latter half of 2023, there has been no attempt by the United States Federal Government to regulate the multi-billion-dollar MCA lending industry. Likewise, most state legislatures have chosen not to tackle the subject of merchant cash advances yet. MCAs Are Legal, But What Protections Do Borrowers Have? While MCAs are not against the law and are recognized as a legitimate type of alternative financing that many...

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Merchant Cash Advance Reverse Consolidations: How Do They Work?

business-owner-and-Merchant cash advance lawyer plan to relieve debt

Quick Answer: Merchant cash advance reverse consolidations are not like traditional debt consolidation products. Merchant cash advance lenders offer these to business owners as a way to cover daily or weekly payments. These often result in borrowers prolonging their payback period because the consolidation is another form of debt. Imagine this scenario. You are a business owner with one or more outstanding merchant cash advance debts. You find yourself struggling to make your daily payments. You research the possibility of obtaining some type of consolidation loan product to refinance your advances to help provide cash flow relief for your business. You come across something...

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When are Merchant Cash Advances Loans? When Do They Cross the Line?

A row of toppled dominoes lays next to a row of standing dominoes. Merchant cash advance debt can have a domino effect on many businesses.

If you are a business owner struggling with merchant cash advance debts, you may be asking yourself how the advance you received can be legal. You may be wondering what you can do to get free of your merchant cash advance debt and return to operating your business as usual. You may also be asking yourself some variation of the following questions: When may a merchant cash advance be considered by a court of law or a governmental regulatory agency to be a “loan”, as opposed to a “purchase of future receivables”? Under what circumstances does a merchant cash advance lose its unregulated...

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The State of Merchant Cash Advance During the Coronavirus Pandemic

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The MCA industry has experienced steady growth since its inception in 2008. Last year, MCA lenders funded an estimated $19 billion to small businesses, representing a substantial increase to the total industry funded amount of $8 billion, only five years ago. Now, in a time of global economic slowdown due to the ongoing pandemic, regulators from the Federal government and certain state governments have begun to take notice of the merchant cash advance industry. In this article we will look at the current state of the Merchant Cash Advance industry, the scrutiny the federal government has placed the industry under, MCA brokerage’s...

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How to Evaluate the Source of Information for Merchant Cash Advances

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The quality of information found online is extremely varying. Anyone can post information on the Internet and not all online sources are equally reliable, valuable, or accurate. It is important to carefully evaluate information found online before relying on it for your own research. You are wondering about merchant cash advance as an alternative financing option for your business. You begin an internet search and find what you believe are valuable bits of information to help guide you in your process of assessing a merchant cash advance option for your business. Everything you find on the top results of a Google search...

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6 Debt Restructuring Strategies That Consolidation Companies Won’t Mention

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With the current slowing of many industries due to the COVID-19 pandemic, there is a good chance that your business cash flow has slowed as well. While MCA lenders have been slightly more flexible throughout the Coronavirus pandemic, some may still be unwilling to work with their borrowers.  You may be in a difficult situation where you are no longer able to pay for your merchant cash advance debt. Maybe your cash flow is solid, but you did not realize the merchant cash advances you accepted would make such a dent in your daily cash flow. You’ve searched the internet and found...

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How to Prioritize The Repayment Of Your Business Debt Obligations


With a seemingly overwhelming amount of business debt on the balance sheet and creditors calling to collect, your head may be swimming. Who should you pay first? What will be the plan to right the ship and nurse your business back to health? Paying off business debt can be a long, trying journey. Many lose motivation and simply give up, especially when facing other financial responsibilities competing for limited resources. Therefore, it is critically important to create a plan to address the problem head on and take control of your organization’s business debts obligations, once and for all. Thankfully, there are a...

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Merchant Cash Advance Reconciliation Clauses and the “Look Back” Reality


Merchant Cash Advance Reconciliation Clauses and the “Look Back” Reality If your business is struggling to pay back a merchant cash advance due to a decrease or complete halt in business revenue or cash flow, then it is in your best interest to request a readjustment on your payment schedule from your lender. Merchant cash advance contracts are full of clauses and fees that work to your lender's advantage, but there are certain clauses that work for you, too. In order to not be considered an illegal loan, merchant cash advance companies must allow you to request a change in your payment plan...

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Does Merchant Cash Advance Regulation Exist?


If your business has ever needed a cash injection to operate in the short term or possibly to expand, you may have encountered merchant cash advances as a method of financing. While considering this option, you may have asked yourself what the difference is between alternative financing and traditional loans or questioned whether it affects credit scores the same way. You may even have gone as far in your research to wonder what sort of regulations exist for merchant cash advances to protect the borrower. Unfortunately, very few protections, if any, exist for business owners who are struggling to pay merchant cash...

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Steps to Consider to Avoid Merchant Cash Advance Default


Merchant cash advances can prove tempting to small business owners in need of fast cash. Some business owners pursue merchant cash advances to fuel business growth. Some seek advances to expand. Some look to advances as very short-term financing with the intent to repay very quickly. Others seek advances to help get through a period of unforeseen hardship. If you have found yourself with too much debt from merchant cash advances, it is natural and healthy to be concerned. Generally, a business will be unsuccessful and fall on even harder times if it attempts to borrow its way out of debt. However, if you...

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