Any business can benefit from MCA, but your MCA business benefits from legal advice more than you would expect. Read on or give us a call today at BBLaw and see how we can help your counsel your MCA business.
Merchant cash advances are short-term loans with quick funding non-astringent eligibility requirements with no collateral needed.
Many might confuse an MCA with a loan, but it is not; MCA is an alternative financial service where you receive an upfront payment in exchange for a portion of future sales. And repayment terms range from three to twelve months, with some providers offering more extended periods.
Though MCA is an excellent alternative finance method for small businesses, particularly those with revenues from credit and debit card sales, they have high costs, predatory clauses, and the danger of cycling debt.
Why Your MCA Business Needs Legal Advice (Especially In New York)
Hiring an experienced attorney will save you lots of time, money, and can even save you from the possibility of incriminating yourself or your business. Whether you face a criminal or civil charge involved in a merchant cash advance situation, hiring a lawyer is crucial before making any final decisions.
Our team at play firm is ready to take you through every stage in your business while handling your case’s complexity and ensuring we get you the best results.
In MCA, both the borrower and the lender have a payback system where they agree upon either a weekly or daily repayment- or any other payment system agreed upon. In return, the lender receives receipts or sales percentages from the borrower.
MCA lenders usually file five lawsuits against borrowers who default from making payments; this is why it is essential to seek legal advice if you have defaulted on payment.
BBLaw Specializes In MCA Business Legal Advice And Counseling
At BBLaw firm, we assist our clients in settling the loans from MCA cases. Our lawyers will help you reduce your payments and lower the interest through a forbearance program; hence pay your MCA loan for less amount you owe for your business relief.
Working with our lawyers will prevent the problem from getting worse by helping your business from bankruptcy, resolve your case early, ad avoid your debts from growing worse.
We advise that you immediately seek legal advice as soon as you have defaulted on your payment. Seeking legal advice earlier on will enable us to:
- Restructure your MCA loan
- Assist you in finally breaking free from your MCA loans or business debts.
- Conduct insulation programs and consultations
- Mitigate and land you a favorable MCA loan resolution
- Reduce if not eliminate the accruing acceptable print fees, interest, and any penalties in your paperwork.
Common Mistakes Made By MCA Businesses
A merchant cash advance mistake can leave a massive hole in your pocket if it does not lead to long-term problems. Moreover, MCA cases usually lead to large amounts of cash in compensation; you do not want to land there.
Make a point to avoid the following mistakes that merchant cash advance providers make:
A lot of the merchant cash advance providers are sued for the following reasons:
- They were withdrawing unauthorized funds from their customer’s bank accounts. Since merchant cash advance providers take a part of the borrower’s future sales, it is no wonder why most providers are tempted to go even further.
- Stating that they would provide their customers with funding but only deliver less than half. Most MCA providers sued by the FTA alleged funding their customers, yet they only offered minimal due to withholding fees.
- Stating that they provide specific leverages, then turn back and do the opposite. For instance, an MCA company might say that they do not require collateral, yet they do or go ahead to ask other security liens or interests.
On the other hand, MCA businesses try to avoid franchise funding. When you get our franchise business off the ground, try to avoid the pitfalls of merchant cash advance, however good an opportunity they might sound.
This is because a franchise usually needs more significant support than the average business, and MCA would only cause long-term problems to their short-term solution model.
Notable MCA Legal Cases
Below are some of MCA famous cases, which prove the importance of MCA business legal advice:
FTC claims against Yellowstone Capital LLC
The Federal Trade Commission recently announced the settlement of the lawsuit against Yellowstone Capital LLC, merchant cash advances provider, the chief executive officer, and the president for alleged deceptive and unfair conduct in violation of FTC’s Act section 5.
Yellowstone was therefore required to pay $9,837,000 to FTC to provide refunds to the impacted businesses.
FTC alleged that the company engaged in deceptive practices or acts by:
- They represented that they did not require personal guarantees or collateral from business owners when they did. Yellowstone Capital LLC. did require business owners to provide a purported security lien or interest on all owned business property.
- They represented that the defendants would provide the business owners with a specific funding amount. In reality, the company provided a substantially lower amount due to fee withholding that they failed to clearly and conspicuously disclose.
- Yellowstone Capital LLC. also took money from bank accounts without permission.
Additionally, Yellowstone was permanently enjoined from making unauthorized withdrawals from consumer’s financial accounts and misinterpretations about:
- Requirements needed to obtain the financing service or product; or
- Any customers charges or fees and the total amount to be repaid; or
- The number of funds they will receive; and
- Any other material fact related to the financing service or product
Yellowstone Capital LLC was further required to conspicuously and disclose:
- Any fees
- The number of fee charges that will reduce the funds received
- The specific amount of money customers will receive after paying all costs and fees
- The total amount of money the customer will repay
FTC bans MCA providers from the industry
FTC permanently banned two merchant cash advance providers from the merchant cash advance and debt collection industries on January 5 for using deceptive and illegal means to seize assets from small businesses, religious organizations, and nonprofits.
The lawsuit entailed the defendants paying $647,000 to resolve the allegations. The order resulted from the 2020 complaint against two New York-based companies engaged within small-business financing, along with several of their officers and owners.
The original complaint stated that the defendants violated FTC Act for engaging in unfair and deceptive acts, including unfair collection practices, making unauthorized withdrawals from customers’ bank accounts, and misinterpreting their merchant cash advances terms, among other things.
Handling an MCA case can be confusing and frustrating when you lack credible, expert, and reliable legal advice.
Luckily for you, you can try our free trial at PPLaw firm, where our expert lawyer will take you through an entire process to help find the best solution for your MCA case. Contact us today, and we are ready to take on your case in exchange for better and quality results.