A Merchant Cash Advance
Under a merchant cash advance, the business receives a lump sum of cash now in exchange for a portion of its future receivables. Typically, the funder will simply deduct the advance either daily or weekly out of the business’ bank account. In Oklahoma, a UCC financing statement for a business asset is filed with the Oklahoma County Clerk, not the Secretary of State, as it has been the statewide filing office for UCC financing statements since July 2001. Because the funder has structured it as a purchase rather than a loan, to the funders, there are no usury laws that apply. Courts look to the economic realities of the transaction to see how the risks were allocated between the parties. Many of the advances sold to businesses in Oklahoma are drafted by funders in New York, contain a New York choice of law provision and specify New York courts. Where the lawsuit would be brought will affect whether and what type of attorney the owner in Oklahoma will need.
No Commercial Financing Disclosure Law
Oklahoma has no commercial financing disclosure law. By mid-2026, twelve states required MCA funders to disclose costs before funding, including the neighboring states of Texas, Kansas and Missouri. Oklahoma is not on that list. Oklahoma also requires no license, bond or registration for funders or brokers, and its payday-lending protections cover consumers only. As a result, an Oklahoma merchant cannot point to a state disclosure violation as bargaining leverage the way a merchant in Texas might under that state’s 2025 law, House Bill 700.
Usurious Loan
Oklahoma’s usury rules are layered. Article XIV, section 2 of the state constitution lets the Legislature set maximum rates. Where it has not done so, contracts above 10 percent a year are usurious, and the rate is capped at 6 percent when none was agreed. For business loans, section 3-605 of the Consumer Credit Code lets the parties agree to a finance charge only up to a ceiling set in a related section, long read as 45 percent a year. Article XIV, section 3 sets the penalty. A lender who knowingly overcharges forfeits all the interest, and a borrower who paid can recover twice the interest paid by suing within two years after the contract matures.
The issue is litigated most often under New York law, as that is the governing law chosen in the contracts. The main focus of the analysis under New York law is whether the payments can be reduced in the event of poor sales, whether there is a fixed maturity date, and whether the funder can still collect from the merchant if the merchant files for bankruptcy. A New York federal district court judge decided in the case of Fleetwood Services v. Ram Capital Funding that one of the advances was a usurious loan with a rate of 99.8% per annum. That decision was affirmed by the U.S. Court of Appeals for the Second Circuit in June 2023. In Adar Bays v. GeneSYS ID (2021), New York’s highest court held that a loan above the 25 percent criminal usury rate is void from the start. The decision also extended to corporations.
Confessions of Judgment
In Oklahoma, a debtor may confess judgment only by appearing in court in person and with the consent of the creditor. 12 O.S. § 689. The previous sections of the law regarding confessions signed in advance were repealed on November 1, 1999. So a confession affidavit signed in advance is not simply “filed” with an Oklahoma court clerk. Some Internet resources tell you that Oklahoma permits confessions of judgment, but section 689 tells a different story, with its requirement of a personal appearance.
The courthouse doors are closed to most of these documents in New York. The legislation amending CPLR 3218 was signed on August 30, 2019, and applies to filings made on or after that date. It permits a confession to be filed only in the New York county in which the defendant resides, and a business is considered to reside anywhere it has a place of business. An Oklahoma business that has no such place should not receive a New York confessed judgment at all. A funder with a confession against such a merchant generally has to resort to an ordinary lawsuit.
Forum-selection Clauses Are Presumptively Valid and Enforceable
A forum-selection clause is a contract provision that specifies which forum will have jurisdiction over the lawsuit. The Oklahoma Court of Civil Appeals stated in Howard Family Charitable Foundation v. Trimble (2011) that forum-selection clauses are presumptively valid and enforceable unless the party challenging the clause can show that the clause is unreasonable or unjust or that the clause was the product of fraud or overreaching. The Oklahoma Supreme Court stated in Tucker v. Cochran Firm (2014) that the validity of a forum clause is treated like any other contract clause. It is enforced by a motion to dismiss or by a motion for summary judgment. If the forum clause states that the merchant “consents” to the jurisdiction of a New York court, the clause may be permissive, not mandatory. A funder could still sue in an Oklahoma district court under a permissive clause.
Enforce the New York Judgment
Can the funder enforce the New York judgment to clear the Oklahoma bank account right away? Under the Uniform Enforcement of Foreign Judgments Act, 12 O.S. §§ 719-726, the New York judgment must be filed with a district court in Oklahoma by the funder. The funder submits an affidavit to the clerk of the district court with the merchant’s last known address. The clerk of the district court mails a notice of the filing of the foreign judgment. No garnishment or execution can be issued until 20 days after the filing. Once the judgment is filed, it can be reopened, vacated, or stayed for the same reasons a judgment of a district court in Oklahoma can be. The judgment is stayed if an appeal of the judgment is pending. A federal judgment entered in New York can be filed with a district court of the United States in Oklahoma upon finality of the judgment under 28 U.S.C. § 1963.
However, Oklahoma law limits enforcement of that judgment against certain types of assets: the homestead exemption sets no limit on the value of a property used as a homestead up to one acre within a city or 160 acres out in the country. That exemption is limited to $5,000 if more than 25% of the square footage of the homestead is being used for business purposes. Oklahoma has opted-out of the federal bankruptcy exemptions. Additionally, under federal law, a debtor must hold property for 1,215 days before it can claim unlimited equity in property as a homestead in bankruptcy.
A New York Lawyer
So, how does all this translate? An Oklahoma owner may require a New York lawyer, more than a local lawyer. If the funder filed suit in New York Supreme Court, or took a confessed judgment in New York, the case is being handled in New York. Defending the complaint, seeking to vacate the judgment, or raising usury defenses under New York law, are functions for a New York lawyer. An Oklahoma lawyer can’t even appear in that court without admission pro hac vice. Oklahoma counsel comes into play once the judgment is docketed in an Oklahoma county, during the 20 day period, and in raising the homestead exemption. Oklahoma counsel also is involved if the funder sues in Oklahoma based on a permissive forum selection clause.
A Bankruptcy Lawyer
Bankruptcy is filed in the federal court for the county where the business is located. In Oklahoma that is the Northern District Court in Tulsa, the Eastern District Court in Okmulgee or the Western District Court in Oklahoma City. If a business is considering this, then they should seek a bankruptcy lawyer who works in that district. Bankruptcy Trustees have challenged funding as disguised loans, and in the case In re Anadrill the challenge was not dismissed. If a business has not been sued yet and the business is losing money due to the debits, then the business should consider negotiating. The attorney general in New York showed how far the state would go to wring concessions from the funders with its January 2025 settlement with Yellowstone Capital that eliminated over $534 million of debt for over 18,000 businesses.
