Merchant Cash Advance
A merchant cash advance is structured as a purchase of a business’s future receivables rather than a loan, and the funder usually collects through daily or weekly bank debits. Most disputes turn on whether that label holds up. For a Nevada business owner, the honest answer to the title question is that it depends on what has already happened. The lawyer who matters most at the start is often one admitted in New York, while Nevada counsel matters most later, during collection and bankruptcy.
Nevada has no commercial financing disclosure law that covers merchant cash advances. A July 2026 survey of state rules counted 12 states with such laws, including California, New York, Texas, Florida, Georgia, Utah, Virginia, and Connecticut, and listed Nevada as having none enacted. In those states, funders must give merchants a standardized statement of financing costs before the deal closes. A Nevada merchant gets no state-required disclosure. Any claim that costs were hidden has to rest on the contract terms themselves rather than on a disclosure statute.
Nevada’s usury statute gives a merchant hardly anything to go on. Nevada law (see NRS 99.050) allows contracting parties to agree upon whatever interest rates, compounding, and/or fees they want as long as the parties reduce the rate and fees to writing. The only limitation in that section is a 36% limit for consumer credit extended to active duty members of the military and their dependents, which has no application to commercial credit. Even if a Nevada court did recharacterize an advance, Nevada law does not have a rate limit that invalidates such a transaction.
So the choice-of-law provision under New York law contained in the majority of these contracts can work in favor of the Nevada-based merchant. New York’s 25% a year criminal usury rate cap can be a defense raised by a corporate borrower. In Adar Bays, LLC v. GeneSYS ID, Inc. (2021), the New York Court of Appeals ruled that a loan in excess of the cap is void ab initio, rendering neither the principal nor the interest collectible. (The determination of whether an advance is a loan is governed by the decision in LG Funding, LLC v. United Senior Properties of Olathe, LLC (2020), which looked to three criteria: (1) is there a genuine reconciliation provision? (2) is there a fixed term? (3) can the funder continue to collect the debt should the merchant file bankruptcy?)
A Manhattan federal court determined in Fleetwood Services v. Ram Capital Funding (2022) that an advance was in fact a loan with a calculated annual rate of 278.5%, a decision that was affirmed by the U.S. Court of Appeals for the Second Circuit in 2023. Bankruptcy courts in other jurisdictions, like Maryland, have applied the LG Funding factors to determine whether an advance is a true sale or a loan.
Confession of Judgment
A confession of judgment is a signed statement where one party agrees that another party can get a judgment against them without filing a lawsuit. On August 30, 2019, New York amended its CPLR 3218 to allow claims for confession of judgment to be filed only in the New York county where the defendant resided at the time the confession was signed, or where they currently reside when the confession is filed. A company is considered to be in any place where it has a place of business. Thus, a company from Nevada without a place of business in New York cannot be subjected to a confession of judgment in New York if the filing is made on or after August 30, 2019. This change was made by the legislature due to reports that creditors were using New York courts to freeze the assets of out-of-state small businesses.
There is a related process for a confession in Nevada, which is not necessarily in vain for a funder. NRS 17.090 – 17.110. Entry of judgment without action; judgment to accord with confession. 1. Judgment may be entered for any specified sum of money without an action having been commenced where a statement in writing, signed by the defendant and verified by the affidavit of the defendant, authorizing the entry of judgment against him or her for the specified sum of money has been filed with the clerk of the court, which statement shall contain a concise statement of the facts which establishes the liability of the defendant or shows that the defendant is indebted or liable for the specified sum of money in question or has been, will become or will be indebted or liable for the specified sum.
The written statement shall be filed with the clerk of the court in which the judgment is to be entered. A funder with a signed confession of a Nevada merchant may be able to use this method. A lawyer in Nevada would review the document to make sure the document satisfies the requirements, particularly the nature of the debt.
Forum Selection Clauses
The suit is generally commenced in New York state court under the forum selection provision. While Nevada enforces forum selection clauses, Nevada courts enforce them quite narrowly. For example, the Nevada Supreme Court found in America First Federal Credit Union v. Soro (2015) that, in an agreement between two parties, a submission to the jurisdiction of another state only constituted a permissive forum and did not operate as a jurisdictional dismissal in Nevada. In DeSage v. AW Financial Group (2020), the Nevada Supreme Court found that the Nevada court would only dismiss a case where the clause selected another forum through clear language of exclusivity. Nevada law would govern interpretation of the forum selection clause, despite a choice of law of another state for the agreement. The funder could also file a suit in a Nevada state court or in the U.S. District Court for the District of Nevada.
Nevada Uniform Enforcement of Foreign Judgments Act
A New York judgment cannot be enforced against a bank account in Nevada without following the process described in the Nevada Uniform Enforcement of Foreign Judgments Act NRS 17.330-17.400: an authenticated copy of the judgment has to be filed with a district court along with an affidavit stating the address and that the judgment is valid. Notice of the filing must be given promptly by certified mail, and execution may not be commenced until 30 days after such mailing. The execution must also be stayed if there is an appeal of the judgment in New York, and if the judgment debtor has posted security as required in New York NRS 17.370. The judgment can be executed for 6 years (which may be extended NRS 17.214). The Nevada Supreme Court has held that the procedures to renew the judgment must be followed precisely (Leven v. Frey (2007)).
Once domesticated, the bank accounts and other property can be attached and the exemptions in Nevada are important particularly if the owner signed a personal guaranty. Bank accounts up to $400 can be exempt in most instances or $2,000 if there has been a recent electronically deposited federal benefit pursuant to NRS 21.105. Up to $605,000 in home equity is protected, $10,000 for tools, inventory used in trade or profession, up to $1 million in retirement accounts and a $10,000 wildcard to use for money on deposit pursuant to NRS 21.090. Under NRS 21.112, the debtor must make and serve an exemption claim within 10 days after the service of the notice of levy on him, and if no such claim is made within 25 days after the levy the property must be delivered to the creditor.
It all depends on where the fighting takes place. If the funder sued the merchant in New York, the merchant will likely need a New York attorney, as all the usury and recharacterization defenses, motions to vacate, appeals, etc. will have to take place in New York. The domestication in Nevada process only allows for limited defenses, such as lack of jurisdiction, fraud, or the judgment already having been paid. A judgment obtained in New York is thus not generally arguable on the merits in Las Vegas or Reno. Nevada counsel would need to be retained by the merchant if the funder sues in Nevada, files a Nevada confession, domesticates a judgment, or levies accounts. If an action has not yet been brought, and the primary issue for the merchant is that the debits are too much for the business to bear, a settlement negotiator may be the first point of contact for the merchant.
Call a bankruptcy lawyer first if you have stacked multiple advances and the debits are crushing your business. A Nevada business files a bankruptcy petition in the U.S. Bankruptcy Court for the District of Nevada. The Las Vegas Division serves Clark County, Esmeralda County, Lincoln County, and Nye County. The Reno Division serves all of the other northern and rural counties. Small businesses can file for reorganization under Subchapter V of Chapter 11. As of April 1, 2025, the Subchapter V debt limit was $3,424,000. In September 2026, Congress passed a bill raising the Subchapter V debt limit to $7.5 million. It was awaiting the President’s signature as of early October 2026.
