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Florida Merchant Cash Advance Attorney

If you’re a small business owner in Florida who has taken out a merchant cash advance (MCA), you may be struggling with high repayment amounts that are seriously impacting your cash flow. MCAs can seem like an easy financing option at first, but they come with some major drawbacks that you should be aware of. That’s why it’s a good idea to speak with a Florida merchant cash advance attorney if you have concerns about the terms of your agreement.

In this article, we’ll break down what merchant cash advances are, their pros and cons, and most importantly – your legal rights and defenses. We’ll also discuss some recent legal trends and regulation efforts in Florida and nationally when it comes to MCAs.

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What is a Merchant Cash Advance?

A merchant cash advance provides a business with a lump sum of cash up front, in exchange for a percentage of future credit card sales over a set period of time. It’s not technically considered a loan, since the repayment depends entirely on the business’s revenue, rather than having fixed monthly payments.

Here’s a quick rundown of how merchant cash advances work:

  • A business applies for financing and provides bank statements so the MCA company can assess potential revenue
  • If approved, the business receives a lump sum up front, often between $5,000 – $500,000
  • The business agrees to pay back a fixed percentage of daily credit card sales, usually 10-20%, until the full amount is repaid
  • The MCA company uses an ACH withdrawal to collect the percentage every day or week

Because MCAs aren’t considered loans, they are able to avoid state usury laws that cap interest rates. This means the equivalent APR on a merchant cash advance can be upwards of 200-300% in some cases.

Pros and Cons of Merchant Cash Advances

On the surface, MCAs can seem like an attractive and convenient way for businesses to access capital when traditional loans aren’t an option. However, there are some serious downsides to be aware of.

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Pros:

  • Fast approval process with minimal paperwork
  • No collateral required
  • Funds provided quickly, often within a few days of applying
  • Payments come directly from credit card sales revenue
  • Payback amounts adjust based on sales volume

Cons:

  • Extremely high equivalent interest rates
  • Payback amounts don’t adjust if revenue drops substantially
  • Difficult to pay off balance when percentage is eating most profits
  • Can impact cash flow and ability to cover expenses
  • Personal guarantees often required
  • Fees for paying back early

As you can see, while MCAs provide easy access to capital, the long-term costs are extremely high. This has caused many businesses to get caught in debt traps they can’t escape.

Your Legal Rights and Defenses

If you’ve taken out a merchant cash advance in Florida and are struggling with repayment, the good news is that you have legal options. Here are a few potential claims to discuss with an attorney:

Unconscionability

If the terms of your MCA agreement are unfairly one-sided, you may be able to argue they are unconscionable. This includes interest rates above 35-40%, which several courts have ruled unenforceable.

Breach of Contract

If the MCA company misrepresented terms or didn’t hold up their end of the bargain, you may have a case for breach of contract. This includes continuing to take daily payments even when your revenue dropped.

Usury

Though rare, some courts have ruled MCAs to be disguised loans subject to state usury laws capping interest rates. If this argument succeeds, you would only owe the principal amount borrowed.

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Deceptive Practices

If an MCA company made false statements or misrepresentations about repayment terms, withheld key information, or engaged in high-pressure sales tactics, you may have a claim under state consumer protection laws.

An experienced Florida MCA attorney can analyze the specific facts of your case and determine if any of these claims could get your contract voided or modified to lower repayment amounts. Don’t hesitate to consult an attorney if you’re struggling to pay back your merchant cash advance.

Recent Legal Trends

Over the past few years, there has been increased legal and regulatory scrutiny over the MCA industry due to predatory lending practices. Here are some key developments:

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  • Class action lawsuits in New York and California have accused MCA companies of charging usurious interest rates in violation of state law.
  • The New York Attorney General sued several MCA companies in 2021 for fraudulent and deceptive practices.
  • The Federal Trade Commission recently proposed a rule to increase regulation and transparency for the MCA industry.
  • California passed a law in 2021 requiring enhanced disclosures for MCAs similar to consumer loans.
  • New proposed bills in Florida, New York, New Jersey and other states seek to cap MCA interest rates.

While MCAs exist in a legal gray area in Florida currently, many experts expect new laws and regulations soon that will provide more protections for small businesses.

Finding the Right Florida MCA Attorney

If you decide to pursue legal action against your merchant cash advance company, it’s critical to have an experienced attorney on your side. Here are some tips for finding the right lawyer:

  • Look for someone who specializes specifically in MCA cases – this is a complex and niche area of law.
  • Find an attorney familiar with your MCA company – they’ll know what arguments and strategies work best.
  • Ask about their track record settling or litigating MCA cases successfully.
  • Inquire about any upfront costs – many lawyers work on contingency for these types of cases.
  • Look for great client communication and responsiveness.

Don’t go at it alone against the MCA companies – their lawyers will fight hard to enforce the terms of your agreement. Having an knowledgeable attorney levels the playing field and gives you the best shot at a favorable outcome.

The Bottom Line

Merchant cash advances can provide quick access to capital, but often come with repayment terms that wreak havoc on small businesses. If you’ve been struggling under the weight of your MCA debt, consult a qualified attorney about your legal options. With the right lawyer on your side, you may be able to get the agreement voided or modified so you can move forward.

Relief may be possible thanks to favorable court rulings and increased regulation of the MCA industry. But you need to take action quickly before your business becomes another victim. Partner with an experienced Florida MCA attorney today to fight back.

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Our team is available always to help you. Regardless of whether you need advice, or just want to run a scenario by us. We take pride in the fact our team loves working with our clients - and truly cares about their financial and mental wellbeing.

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$500,000 MCA Restructured Over 3 Years
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$250,000 SBA Loan Offer in Compromise
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$350,000 MCA Restructured Over 2 Years

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