MCA Defense Lawyer
MCA’s require a business to make payments on a “sale” or “purchase” of the business’ future receivables (instead of a loan). A business that obtains an MCA will have a set payment taken out of the business’ bank account daily or weekly. The sale or purchase (which has various different legal terms and definitions) is important because many states’ usury laws limit the interest rate that can be charged on a loan, but not on the amount charged on a purchase (most states have no limit on what can be charged on a purchase). A Jacksonville Business Owner who is falling behind on MCA payments may not get a quick answer to whether they need an MCA defense lawyer.
It depends on where the lawsuit is filed – in the New York courtroom chosen in the contract, perhaps in the Duval County courtroom, or the clerk of court office where they filed a judgment from some other state, or maybe in the federal bankruptcy court downtown. Different lawyers in different cases. Many times the most important lawyer needed is one licensed in New York and not Florida.
Florida Commercial Financing Disclosure Law
Q: What about Florida’s commercial financing disclosure law? Are there commercial financing disclosure laws in Florida? Yes. Are merchant cash advances covered by those laws? Yes. For what type of transactions are commercial disclosure laws typically in place? In June of 2023, the Florida Commercial Financing Disclosure Law (section 559.961 through 559.9615 of the Florida Statutes) was signed and effective for transactions consummated on or after January 1, 2024. It is in place for transactions of $500,000 or less. The provider must give in writing the advance amount, the total amount that the business will pay, and the dollar cost of the advance before the advance is funded.
This does not apply to banks and it does not apply to the providers that do not have more than 5 transactions in the state of Florida in a 12-month period. Only the Florida AG can enforce the law. Fines are $500 per violation, capped at $20,000, rising to $1,000 per violation, capped at $50,000, after a prior written notice. The merchant is not granted the right to sue under the statute, and the statute does not make an advance obtained in violation thereof unenforceable. Florida has extremely strict usury laws. Section 687.02 of the Florida Statutes states that any interest charged in excess of 18% per annum simple interest on an obligation of $500,000 or less is considered usurious.
Section 687.071 of the Florida Statutes says that knowingly charging over 25% is a misdemeanor, and knowingly charging over 45% is a felony, and that Florida courts will not enforce a debt in violation of this statute. However, this only applies to loans. The Third District Court of Appeal of Florida ruled in a 2021 decision in Craton Entertainment v. Merchant Capital Group that an advance that was subject to a ‘reconciliation’ provision was not a loan, but a sale of receivables. Despite the fact that the funder conducted a credit check, took a security interest in, and obtained a personal guaranty from the owner, the contract was not a loan, but a sale, because the repayment was not absolute but was based on the success of the business.
Most MCA contracts are subject to New York law and select New York courts. Florida courts have generally upheld this choice of law and choice of forum. In the case of Manrique v. Fabbri (1986), the Florida Supreme Court found that forum selection clauses are presumptively valid and will be enforced unless it is found that the clause is unreasonable or the product of inequality in bargaining. Florida courts have since distinguished between mandatory forum-selection clauses (suit may be brought only in the chosen forum), and permissive forum selection clauses (the parties consent to jurisdiction in the chosen forum). Under New York law, a corporate merchant is prevented from asserting the civil usury defense, but may assert the criminal usury defense if the rate exceeds 25%. In Adar Bays v. GeneSYS ID (2021), the highest court of New York found that a criminally usurious loan is void ab initio. New York courts use the presence or absence of a reconciliation provision, fixed term and recourse in the event of bankruptcy to determine whether the advance is, in fact, a loan.
Confession of Judgment
A confession of judgment is not the same for a merchant in Florida as a merchant in New York. In Florida, all powers of attorney to confess judgment prior to bringing any action against the debtor are void pursuant to Florida Statute 55.05, regardless of where the powers of attorney to confess were signed. In New York, the state effectively shut the courthouse doors to out of state confessions of judgment by amending C.P.L.R 3218 on August 30, 2019. The amendment only allows entry of a confession in the New York county where the debtor was living at the time the confession was signed. A business with no New York address, for example a business in Jacksonville, has no county in New York where the business can enter a post-amended confession.
There had been massive abuse of this process prior to the amendment. In January 2025, the New York State Attorney General reached a $1.065 billion settlement with Yellowstone Capital. The terms of the settlement required Yellowstone to cancel more than $534 million in debt owed by more than 18,000 businesses and vacate judgments against these businesses.
The Local Jurisdiction
In a standard lawsuit brought by a funder, the clause designating the forum will often point to a New York State court. In the case of the funder suing in the local jurisdiction, or if the choice of forum is permissive, the case would be filed in the Fourth Judicial Circuit of Florida, which handles Duval, Clay, and Nassau counties. As of January 1, 2023, Duval County Court has jurisdiction to hear all civil cases where the amount in controversy is not more than $50,000, and circuit court will hear cases involving amounts over that amount, all of these at the Duval County Courthouse on West Adams Street. In a lawsuit brought by a merchant against a funder, for example a civil RICO case (the same theory successfully employed in the 2022 Manhattan case of Fleetwood Services v. Ram Capital Funding), in federal court it would be in the Jacksonville Division of the United States District Court for the Middle District of Florida, which hears 12 counties, all at the Bryan Simpson courthouse on North Hogan Street.
Florida’s Enforcement of Foreign Judgments Act
The New York judgment by itself can’t be used to reach a bank account in Jacksonville. Pursuant to Florida’s Enforcement of Foreign Judgments Act, the funder needs to record the New York judgment with the clerk of the circuit court, together with an affidavit of the debtor’s last known address. The clerk must send notice by registered mail, and enforcement proceedings cannot commence for at least 30 days after mailing the notice. Pursuant to section 55.509, the merchant has 30 days from recording the judgment to file a Florida suit challenging the jurisdiction of the New York court or the validity of the judgment and to record a lis pendens. If both steps are done, the court must stay the enforcement proceedings. After the time has expired, the creditor may begin enforcement proceedings against local accounts. The owner who has signed a personal guarantee of the obligation has one last defense: the $750 a week or less in disposable earnings of a Florida head of family are exempt from garnishment and traceable wages are protected for 6 months after deposit.
A Jacksonville company will appear at the Jacksonville Division of the U.S. Bankruptcy Court for the Middle District of Florida, in the Bryan Simpson building. In In re IVF Orlando, on October 3, 2025, Judge Tiffany Geyer allowed an Orlando fertility clinic to reorganize under Subchapter V over objections from two funders. Judge Geyer was sitting in the Orlando Division of the Middle District. The judge noted that when a business entered into an advance agreement, it “had no receivables to sell. It had only the hopes that they would.” One of the funders paid the clinic $120,000 for the privilege of buying $166,800 of the clinic’s future receipts.
A New York Lawyer More than a Jacksonville Lawyer
It depends and a Jacksonville business owner may need a New York lawyer more than a Jacksonville lawyer. If a merchant has a New York state court agreement with a funder and the funder sues under the New York forum selection clause, the merchant needs a New York lawyer to assert New York usury in New York state court. If a funder has a New York judgment recorded in the real records of Duval County, a Florida lawyer will be needed to act under the 30 day deadline in section 55.509.
If a funder has filed in the Fourth Judicial Circuit, a Florida lawyer will be needed. If there’s a personal guaranty, a Florida lawyer should be sought when an owner’s salary and personal property are at stake. If a merchant has multiple stacked advances robbing a business that otherwise would be in good condition, a seasoned Middle District bankruptcy lawyer should be consulted first. If a merchant isn’t under a lawsuit or judgment, the best deal may be a settlement with the funder.
