If you have no option but to take out an MCA, it is in your best interest to understand what may be in the contract to better protect yourself from predatory lending. You get extreme flexibility with merchant cash advances. 2.1 Merchant Cash Advances - Massachusetts Bankruptcy Lawyer; 2.2 Best Loans for Law Firms: How Attorneys Can Use Merchant Did you receive a merchant cash advance breach of contract lawsuit? Your credit card processing firm will facilitate repayments for the cash advance. Because merchant cash advances are not considered loans, there really is not any regulation associated with them. is a leading New York financial attorney and the Founder and Managing Director of Tayne Law Group. Do you have more than one merchant cash advance? Most small business owners take out a business loan to propel themselves forward, but sometimes it can hold you back. Initially merchant cash advances were byproducts to selling credit card processing point of sale systems. In Clark v. Advance Me Incorporated., case number 2:08-CV-03540, Advance Me paid $11.5M to settle the allegations and agreed to implement measures to protect merchants when their receivables fell short for legitimate reasons. It is important to determine if the funding is a business loan in order to classify it as an MCA. Both finance lenders and brokers require licenses to operate in California. 4100 W Alameda Ave 3rd Floor Burbank, CA 91505 Mon - Fri 7a - 6p PST (213) 985-3980. A merchant cash advance may be ideal for you (a business owner) if you are not willing to use your assets as collateral when seeking a loan. Merchant Cash Advance Attorney in California. Only with these things, you are ready to get merchant cash advance loans. regulation that these businesses are subject to. formId: "3d8de059-05d4-4321-8a0a-53170b1a96b3" Choose An NYC Debt Collection Attorney Over Any Collections Agency, How To Handle Commercial Litigation In NYC, How Uniform Commercial Code Relates To Commercial Debt Collection, Always Choose A Debt Collection Attorney Over A Debt Collection Agency, What Was The Largest Debt Collection Lawsuit Of All Time. Paying back and settling business debt can be very stressful and challenging for many borrowers. If you have a merchant cash agreement and the situation with your business profits has changed, contact our attorneys to help negotiate on your behalf! In 1998 a company called AdvanceMe (now called CAN Capital) pioneered the splitting of credit cards. You should be prepared to make these payments once the cash advance is sent to you. Call us today for a business loan at 800-630-4214 for a consultation on merchant cash advances or any of our financing programs. Simplicity, faster access, and convenience are the three attributes used to describe the value of merchant cash advances. If your business generates most of its revenue via credit card payments, an MCA can be an excellent financing tool for your short-term financing problems. You may have come across merchant cash advances as a source of funding in case your company has ever required extra cash to function in the short term or expand. Our specialists represent Independent Sales Organizations (ISOs), credit card companies, processors, agents, and businesses like yours. The public has until April 26th to submit any comments on the amended portions of the proposed rules. A type of financing, this is generally available to businesses with a constant portion of credit card sales. You have provided support, knowledge and experience and helped provide and support jobs, all while trying to earn a living for your family. Business Debt Relief - Done Right! Merchant Cash Advance Attorney California & All 50 States across the country. Let Us Help You! This gives MCA providers a lot of discretion to act in unethical ways in order to get beyond the restrictions and laws that conventional lenders must observe. SB 1235 was passed by the California Senate and Assembly on 31st August, 2018, and Governor Jerry Brown signed and approved it into law on September 30, 2018. Because merchant cash advances are not deemed loans, they are not subject to any regulations. A law firm focusing on settling Merchant Cash Advance loans for clientsacross all 50 States. The one type of regulation these companies fall under is from the Uniform Commercial Code. The bill adds a new Division (Division 9.5) to the California Financing Law (CFL). The interest rate or effective APR is so excessive and in turn profitable for Merchant Cash Advance funders that large publicly traded companies have also entered the Merchant Cash Advance arena. The Business Debt Law Group Law Group has been successful in substantially reducing debts with lenders. If it takes a week to set up the account, it may also take a week to have funds remitted to you. Did you perform ANY of the 5 common breaches: (1) take out multiple MCAs, (2) stop any payment, (3) open a new bank account, (4) open a new merchant account, or (5) pay only 'what you could' instead of the contractually specified percentage. The CFL generally covers both consumer and commercial lenders. You deserve to know what options you have. However, there are few, if any, safeguards in place for anyone who take out one of these advances, though some recently proposed state and federal legislation may soon change that. Once a merchant cash advance company has a CFLL license, even if the transactions are recharacterized as loans, the transactions are not usurious under state law. Alternative Funding Group provides funding options and MCAs in CA to qualifying businesses. Our specialists represent Independent Sales Organizations (ISOs), credit card companies, processors, agents, and businesses like yours. Your merchant cash advance attorneys may be able to: If you are experiencing merchant cash advance legal issues, if youve had a merchant cash advance breach of contract or if you need an, Following an initial free consultation, one of our firms attorneys will review your merchant cash advance or business loan agreements and share their findings and initial legal advice with you. If youve taken an advance from a merchant cash advance lender and are now struggling to address your situation, you need an experienced merchant cash advance attorney on your side. Right before the financial crisis when the split-finding patent was invalidated, companies began to focus solely on funding advances. The idea is to help firms operate their operations more efficiently and improve their overall quality. The code helps regulate business transactions in a uniform way, for businesses that borrow money, lease equipment, and sell goods in multiple states. Do you have a merchant cash advance you are struggling to pay? New York (the epicenter of MCA) enacted a law in September 2019 banning New York Funders from issuing a Confession of Judgment to an out of State borrower like a California Resident. This is considered a Merchant Cash Advance. This legislation was amended to remedy the extreme abuses that were taking place by merchant cash advance companies. According to the FTC, the use of confessions of judgment conflicts with the defendants contracts that provide that Defendants will not hold consumers in breach if payments are remitted more slowly. In particular, the New York AGs complaint related to recharacterization of merchant cash advances as loans provides significant guidance for not only the drafting of the MCA agreement, but also the underwriting and marketing of the MCA. }). Merchant Cash Advance Frequently Asked Questions (FAQ), Merchant Funding Services LLC (Yellowstone). NY Office 26 Broadway 3rd Floor New York, NY 10004 Home; About Us; Attorney Profiles; Once your request for a merchant cash advance California is approved, you will receive the funds. Many people think that the aftermath of the financial crisis in 2008 is when merchant cash advances came to rise, but that is incorrect. Instead, New York passed a law that prohibits entering a judgment by confession in New Yorks courts against a non-New York debtor. Looking for different sources of financing is an excellent way to help sustain your business, especially in the case of potential downfalls. However, in order to take advantage of these adjustments, a small business typically must inform the financing provider of the small businesss distress. Later her company would become CAN Capital. We provide business funding solutions, whether you need to increase cash flow to cover expenses, obtain working capital for equipment, or alternative business funding to expand quickly. Fraud, for instance, is actionable. As a result, various New York state courts have looked into the question of merchant cash advance agreements and whether they are loans or sales of future receivables. MCA providers consider your credit card processing statements and bank statements for your business to determine a factor rate for your MCA. The types of law firm payment processing. Instead, an MCA is an advance on your future revenue. You will have the initial amount deposited directly into your business bank account. The California Financing Law (CFL) has historically been guiding licensing procedures for finance brokers and lenders. Your Business - Your Money . Small business owners occasionally require additional operating capital to effectively run their businesses. AdvanceMe was monopolizing the merchant cash advance industry because they owned the patent on split-funding (known today as merchant cash advance). Our services include, assisting with the California Finance Lenders License application, legal advice about compliance with the California Finance Lenders law and applicable California and federal financial laws and regulations, drafting of contractual documents and disclosures in compliance with the California Finance Lenders law and applicable state and federal financial laws and regulations, representation before the DFPI in administrative litigation matters, audits, inspections, citations, desist and refrain orders, license suspensions, revocations, and accusations, representation in appeals of administrative decisions, and representation of California merchant cash advance providers in court in defense against lawsuits brought by the DFPI, or other government authorities. It is not uncommon for merchants to default on their payments because of their previous poor line of credit. Moreover, you have the choice of using the option as your requirements. Although the new law does not require Merchant Cash Advance providers to be licensed in California, it is still newsworthy because the new law now includes providers & funders of commercial, non-loan financing options like a Merchant Cash Advance loan into the purview of the California Financing Law. Within 24 hours of submitting your application, the MCA company may ask you to provide evidence of accepting credit cards in your business for at least two years. A holdback percentage determines the amount of money an MCA company will subtract from your daily credit card sales. In the absence of government oversight or regulation, many debtor merchants have looked to the courts for relief. There are hundreds of merchant cash advance lenders ready to give you cash while putting you in an unsustainable repayment schedule. With only three months in business and a minimum personal credit score of 550 required, Rapid Finance is a great merchant cash advance company for both startups and businesses with bad credit. In this case, reputation stems from issuing clients with attractive merchant cash advance options. Save my name, email, and website in this browser for the next time I comment. Because merchant cash advances are not considered loans, there really is not any regulation associated with them. Our law firm has settled Merchant Cash Advance loans with virtually every funder, big to small, located in California or in a different State, large loan balances to small payoff amounts and everything in between, Grant Phillips law has seen it and settled it. Worse, the lender may exercise a Uniform Commercial Code (UCC) Lien against your business to stop other businesses, insurance companies, or individuals from paying you owed cash. This method is only one of the tools we have at our disposal, providing you with even more incentive to complete your companys financial demands with us. Grant Phillips Law focuses exclusively on Merchant Cash Advance law protecting merchants and borrowers. 322 Encinitas Boulevard, Suite 200 Encinitas, CA 92024. In a typical merchant cash advance, lenders and borrowers agree to a daily or weekly payback system and in return, the lender receives a percentage of sales or receipts from the borrowers. Leslie H. Tayne, Esq. In this article we will look at the current state of merchant cash advance regulation and recent trends in many states towards rectifying issues with advances. However, there are some extra strings attached when you go with a merchant cash advance. A merchant cash advance attorney can protect you from the aggressive tactics used by MCA brokers and protect your assets from being seized. Our experts will review your information and contact you for further discussions. Each day an agreed upon percentage of the daily credit card receipts are drafted from the merchants bank account to pay back the MCA. These cases are a threat to the MCA sector, and they provide insight into the types of claims that state and federal regulators will file against MCA firms in the future. While the repayment term of merchant cash advances varies, you may expect to pay your MCA in a maximum term or 12 or 24 months. Call for a free consultation (866) 890-7337. . Alternative Funding Group offers an MCA in California to a business that needs a lump sum of capital to move ahead. A merchant cash advance in California is a way for companies to get the funds they need without having to wait for the money to come in from clients. Need help with any type of legal issue? The New Jersey State legislature strengthened its Confession of Judgment bill by adding language that grants the Attorney General power to enforce monetary penalties against violators. Hiring merchant cash advance attorneys before your debt problems grow worse will ultimately save you from a potential future bankruptcy. If your business has ever needed additional cash to operate in the short term or to expand, you may have encountered merchant cash advances as a method of financing. In time, many feel that the CFL will require Merchant Cash Advance funders to be licensed. An MCA could be an ideal solution to financing problems experienced by your business if you have a low credit score or little/no collateral. Sorry, the comment form is closed at this time. Many would claim these advances to fall under the definition of predatory lending. Many times merchants are forced into a vicious MCA debt trap, having to get advance after advance because they cant afford to pay back the prior MCAs they received. A merchant cash advance provides small business owners quick access to capital for emergencies and all types of business needs. But is Merchant Cash Advance legal in California? Merchant cash advances are now said to generate $5 billion to $10 billion in loans every year. Most business cash-advances require a daily repayment which can become challenging if the business experiences financial distress. A merchant cash advance (MCA) isnt technically a loan, but rather a cash advance based upon the future credit card receivables a business will receive. You may be surprised to learn of your extremely high actual interest rate, costs and fees. Some States are beginning to take a look at this, but at present no background checks, licensing, bond requirements or laws exist, to govern the creation of a Merchant Cash Advance funder and or broker. She's . Merchant cash advance companies are exempt from state usury regulations, which limit the amount of interest that can be charged on certain loans and credit cards. If youve received notice from your lender, you may be asking yourself what a merchant cash advance lawsuit is and what it entails? However, what may have been characterized by the lender as a factoring relationship was, in fact, an unregulated loan. 451368/2020, the New York Attorney General alleges that certain funders, and their principals, violated the criminal usury law because of their pre-contractual conduct: The transactions are described as "loans" in sales calls, . Skip to content. We are the better option for merchant cash advance companies to collect outstanding debts from merchant accounts. They don't work the same as a traditional loans, which provides a lump-sum disbursement that you pay back in fixed installments over several years. hbspt.forms.create({ MCA's are not considered a loan and there is no federal oversight of the advances. Our primary objective is helping business owners learn about a wide array of financial instruments, such as small business loans, merchant cash advances, lines of credit, SBA loans, term loans, and more. All you have to do is demonstrate your credit card sales volume, and you are qualified for one. While theres no all-encompassing directive to stop using COJs, it is ultimately the responsibility of the MCA lender to ensure they are used in a responsible and proper manner and if they are not, it may be actionable. Global will tailor its services, collection, lawsuit, enforcement, and liquidation to your needs. The FTC and the New York Attorney General both accuse the defendants of illegally marketing, providing, and collecting MCA. Rather than paying back interest on a line of credit, you end up paying a percentage of your sales, sometimes on a daily basis. . We have saved our clients millions of dollars. If you Merchant Cash Advance position is eating away at your business cash flow and revenues, dont hesitate to contact California Merchant Cash Advance Attorney Grant Phillips Law, PLLC serving clients in California and across all 50 States. Overall, this is a financing option that many businesses will take advantage of if they dont have a great credit score to get other types of financing from traditional banks. A factor rate helps to express the interest amount an MCA provider can charge on your advance. Thus, it has been a popular choice for business owners seeking to assist or expand their businesses. If your business is struggling with repaying a merchant cash advance, if you are at risk of defaulting, or have already defaulted then you should strongly consider consulting with an attorney experienced with mca lawsuits. If you need a Merchant Cash Advance Attorney California, contact our law firm. This is called a holdback and it will continue until the advance is paid in full. Return home. Once you receive it, you can also start paying the MCA company. Nevertheless the law does require a funder offering a form of commercial financing, of $500,000 or less to a merchant / borrower, must now provide the Merchant with a Cost Disclosure Statementbeforecompleting the transaction. Global Legal Law Firm doesnt just talk a big game, we actually deliver. California commercial financing disclosures. 10 years of experience fighting, settling and litigating Merchant Cash Advance loans. A quick and easy way for small business to obtain funds, merchant cash advances have shown to have high interest rates and unsustainable repayment schedules. Because merchant cash advances are not deemed loans. Since MCAs come unsecured, you will not have to give collateral to access them. portalId: "20208004", Merchant cash advances can be very expensive. If you did, the MCAs can use the COJ (also a personal judgment) to collect from your own assets! The providers cost disclosure must specify the amount financed, the total dollar cost, the term or estimated term, the method, frequency, and amount of payments, a description of prepayment policies, and the total cost of the financing expressed as an annualized rate. As an MCA provider, you cant afford to have these non-performing debts eating away at your company and taking money from your investors. Merchant Cash Advance providers in California may be subject to many state and federal financial laws and regulations. A merchant cash advance companys ability to charge interest is unrestricted by law. Merchant Cash Advances came about during the 2008 lending crisis when banks were refusing to lend to most small businesses. The application process is as follows: MCA providers usually offer potential and existing clients a one or two-page form for MCA applications. On August 31, 2018,the California Senate and Assembly passed SB 1235. The DBO encourages small businesses to review the terms of their existing financing products to determine whether they may be entitled to relief and report finance companies that fail to honor contractual terms that provide relief. Globals experience coupled with its team of nationwide litigators and seizure experts allows Global an extreme advantage to help your company recoup losses. While contemplating this option, you may have wondered what the difference is between alternative financing and regular loans or whether it has the same impact on credit ratings. Yes, Grant Phillips Law has successfully negotiated settlements with most of the Merchant Cash Advance funders existing throughout the United States. The primary allegations by the FTC concerning marketing relate to misleading claims. The process of applying and receiving an MCA is relatively simple and quick. MCA providers base their reputation on the type of reviews and feedback they receive. When the economy took a downturn in 2008, it was one of the only sources to get funding for your business and this opened the floodgates. It seems pretty clear at this point that some type of government regulation will be required to oversee the online and alternative lending industry. Will it lower payments? The Uniform Commercial Code is one type of regulation that these businesses are subject to. 1. Are you a California resident? Johnson was running four Gymboree Playgroup & Music franchises. Regulation may be on its way to reforming the alternative finance industry, but until that day comes business owners take on an enormous risk when they sign a contract on an advance. The addition of brokers does not make this distinction any easier. Your connection to Wide Merchant Group is securely encrypted, Wide Merchant Group3580 Wilshire Blvd #160 Los Angeles, CA 90010800-630-4214, Copyright 2018 Wide Merchant Group - All Rights Reserved | Privacy Policy, Multiply the holdback percentage with your monthly credit card sales, Divide the total funding cost by the estimated monthly payment figure to determine how long it will take you to repay. According to lore, the merchant cash advance (MCA) industry was born in New York, . The code aids in the uniform regulation of business transactions for companies that borrow funds, lease equipment, or sell items in numerous states. Are you having merchant cash advance legal issues? As accounts receivable acquisition transaction, such as factoring, asset-based lending, commercial loans, commercial open-end credit plans, or lease financing transactions, is a covered commercial finance transaction. Unlike interest rates, which change as your debt reduces, factor rates are only imposed on the original cash advance amount. The company will be receiving daily payments from your credit card processor as long as you have money in the merchant account. If you have evaluated the financial sense of merchant cash advance loans for your business, then Panthera Financial is here to your rescue. 1 Merchant Cash Advance Defense Lawyer | Jacovetti Law, P.C. Wide Merchant Group offers business owners merchant financing solutions with fixed rates, minimal paperwork, and flexible payables. The CFL applies to both consumer and commercial lenders, requiring licensing and disclosure as well as interest and fee caps on some loans. Does Grant Phillips Law obtain a formal Stipulation of Settlement Agreement documenting the settlement? Some examples include Shopify, Square, PayPal and even American Express. The life of this loan is also much shorter than a normal remittance which can end up causing problems if the borrower is not prepared to pay back the money during that agreed-upon time. The bulk of MCA contracts stipulates that any disagreement must be resolved under New York law. A specialized Merchant Cash Advance Law Firm, serving residents of California. The payments can then be paid back in a specified time frame. Once our initial review is complete and you have elected to retain our firm, your assigned litigator will begin to work with your lenders to secure a method and pathway to get you out of the vicious cycle you are presently in and most importantly, help to get you back control of your business and its cash flow. If you have a stable cash flow, it may take you a shorter time to pay back the cash advance. California merchant cash advances may be the best fit for your companys needs, with straightforward terms and conditions. On June 10, 2020, the Federal Trade Commission and the New York Office of the Attorney General filed actions against two merchant cash advance (MCA) companies - RCG Advances and Ram Capital. Lets settle your Merchant Cash Advance loan with your MCA Funder. The additional fees may include advance fees or setup fees. Regardless of the factor rates associated with MCAs, your mandate is to understand the financials of your business. On 10th June in 2020, the Federal Trade Commission and the New York Attorney General filed lawsuits in the Southern District of NY and the Supreme Court of the State of New York County of New York against two merchant cash advance companies, RCG Advances and Ram Capital Funding. Because California is one of the best states for domestic and international businesses, a CA merchant cash advance in California is beneficial for the sustainability and growth of these . Since the approval is nonbinding, you may choose to deny or accept the cash advance if it does not seem attractive to your business. This will not only help to protect small business owners but should also help legitimize the small business alternative lending industry, overall. Certain considerations have been used in recent cases examining whether merchant cash advance agreements are sales or loans, determining whether the transaction provides for absolute or dependent payback. Prior results do not guarantee a similar outcome. Ms. Johnson obtained a Patent for this system in 1997. How Fast Can I Be Approved for an MCA in California? The following is asample listof many of the funders Grant Phillips Law have negotiated with successfully. So don't delay; secure your working capital today. The MCA company also looks at how long the merchant has been in business for and what industry they are in. The most common methods include credit and debit card processing, electronic funds transfer (EFT), and automated clearing house (ACH) transactions. The law is provided under Division 9 of the Financial Code. If you repay the advance agreed upon in twelve months, your APR would likely be closer to 30%.
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