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Fort Worth Merchant Cash Advance Attorney

Merchant cash advances (MCAs) have exploded in popularity among small businesses in Fort Worth and across Texas in recent years. While MCAs can provide quick access to capital, they also come with some major drawbacks that business owners should be aware of. This article will provide an overview of MCAs in Fort Worth, discuss the pros and cons of these financing arrangements, and explain why it’s crucial to work with an experienced merchant cash advance attorney when dealing with an MCA company.

What is a Merchant Cash Advance?

A merchant cash advance is a form of alternative small business financing where a company provides a lump sum of capital to a business in exchange for a percentage of future credit card and debit card sales. It is not technically considered a loan, but rather a cash advance on future revenue.Here’s how it works:

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  • A business applies and the MCA company evaluates their credit/debit card processing history to approve them.
  • If approved, the business receives an upfront lump sum, usually between $5,000 – $500,000.
  • In exchange, the business agrees to pay back the advance through daily payments which amount to a fixed percentage of their credit/debit card sales.
  • The payments automatically deduct from the business’s card receipts until the advance is paid back in full plus fees/interest.

MCAs are appealing because they provide fast access to capital, often in as little as 24-48 hours, with minimal paperwork. The approval requirements also tend to be less stringent than traditional bank loans.However, MCAs come with very high costs and rigid repayment terms that can seriously strain cash flow. That’s why it’s critical to understand the pros and cons before agreeing to an MCA.

Pros and Cons of Merchant Cash Advances

Below is an overview of the main advantages and disadvantages of merchant cash advances:


  • Quick access to capital – MCA companies heavily promote how fast they can fund businesses, often in as little as 24-48 hours. This speed appeals to businesses that need immediate capital.
  • Flexible qualifications – MCAs generally have less stringent approval requirements compared to bank loans. This allows newer businesses or those with lower revenues/poorer credit to qualify.
  • Predictable daily payments – The fixed percentage deductions from card receipts makes the repayment schedule predictable.


  • Very high costs – MCAs are extremely expensive, with equivalent annual interest rates typically between 70% – 200%.
  • Daily repayment requirements – The daily repayment structure can put a major strain on cash flow, especially during seasonal slow periods.
  • Aggressive collections – MCA companies are known to engage in aggressive collections tactics like accessing business bank accounts directly if payments fall behind.
  • Confusing contract terms – MCA contracts often contain vague terminology and lack transparency about total costs. This makes it difficult for business owners to fully grasp what they’re agreeing to.
  • Overreliance on credit card sales – Tying repayment solely to credit/debit card sales leaves businesses in trouble if there are disruptions to card processing.

As you can see, the cons often outweigh the pros when it comes to merchant cash advances. The exorbitant costs and rigid repayment terms mean they should only be used as an absolute last resort.

Why Work with a Merchant Cash Advance Attorney

Given the extremely high costs and risky nature of MCAs, it’s highly advisable to work with an experienced merchant cash advance attorney before signing any agreement.Here are some key reasons why legal help is so valuable:

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  • Review contract terms – An attorney can review the MCA agreement to ensure you fully understand all the terms, costs, and fine print before signing.
  • Negotiate better terms – They can try to negotiate the removal or alteration of unfavorable clauses in the contract to put you in a stronger legal position.
  • Explain legal options – If you run into issues repaying or have concerns about unfair collections practices, an attorney can advise you on your rights under Texas law and legal options.
  • Assist with disputes/legal action – If a dispute arises with the MCA company, an attorney has the expertise to represent your interests in court if necessary.

Having experienced legal counsel to protect your interests can prove invaluable when dealing with merchant cash advance companies. Don’t sign any MCA agreement without proper legal review.

Texas MCA Laws and Regulations

While the MCA industry remains largely unregulated in Texas, there are some relevant state laws and recent developments to be aware of:

  • Usury laws – MCA agreements with excessively high equivalent interest rates may potentially violate Texas usury laws, which set maximum allowable rates.
  • Deceptive trade protections – Texas has strong laws prohibiting deceptive or misleading marketing, sales tactics, and contract terms. These may provide recourse if an MCA company engages in predatory practices.
  • Recent federal scrutiny – Federal regulators like the FTC and CFPB have started taking a closer look at the MCA industry’s practices nationwide, which could spur tighter regulations in Texas.
  • Potential statutory changes – Some Texas legislators have proposed implementing stricter regulations around MCA lending similar to other states. Additional consumer protections may be on the horizon.

While Texas MCA laws remain limited for now, be sure to consult a knowledgeable attorney regarding your rights and any potential claims under existing statutes. The regulatory landscape could also shift quickly.

Finding the Right Fort Worth Merchant Cash Advance Attorney

If you are considering or dealing with a merchant cash advance in Fort Worth, it’s essential to find an attorney experienced in this unique and complex field. Here are some tips for finding the right legal help:

  • Search for MCA-specific experience – Look for lawyers who explicitly state they have extensive experience dealing with MCA companies and cases. General finance law expertise isn’t enough.
  • Ask about MCA contract review – A qualified attorney should offer to review any proposed MCA contract in detail before signing to identify areas of concern.
  • Inquire about negotiation history – Ask if they have a proven track record of successfully negotiating MCA agreements for improved contractual terms.
  • Seek out settlement expertise – If you already signed an MCA and are struggling with repayment, find an attorney skilled at negotiating settlements on the debt.
  • Verify state-specific knowledge – Make sure they have in-depth knowledge of Texas MCA laws and regulations.
  • Check for litigation experience – In case legal action becomes necessary, pick a lawyer with litigation experience against MCA companies.
  • Compare multiple options – Set up consultations with several merchant cash advance attorneys before deciding. Compare their experience, fees, and responsiveness.

Finding the right legal partner can help ensure you make the most informed decision on any MCA agreement while protecting your interests. Don’t take on these risky financing products alone.

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Alternatives to High-Cost Merchant Cash Advances

Given the many drawbacks of MCAs, it’s generally wise to explore alternative small business financing options first whenever possible. Some options to consider include:

  • Bank loans – A traditional term loan from your bank is often the most affordable financing option. Explore whether your business may qualify for a small business loan product.
  • SBA loans – The Small Business Administration guarantees loans made by approved lenders to qualifying businesses. Expand your search to SBA lenders.
  • Business lines of credit – Lines of credit provide revolving access to capital as needed. This can be more flexible than a lump sum MCA.
  • Invoice factoring – Invoice factoring exchanges your unpaid customer invoices for capital. This also ties repayment to customer invoices rather than card receipts.
  • Equipment financing – Financing for new equipment you need can spread payments over time.
  • 401(k) business financing – Certain plans allow you to leverage your existing 401(k) funds for your business.
  • Friends & family loans – An informal loan from people close to you may be possible at a lower cost than an MCA.
  • Crowdfunding – Crowdfunding platforms like Kickstarter allow you to raise funds from a large pool of backers.

While you may not qualify for every option, exploring alternatives to merchant cash advances can potentially connect you to much more affordable business financing.

Final Tips on Merchant Cash Advances

To conclude, here are some final tips to keep in mind with merchant cash advances:

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  • Only use MCAs as an absolute last resort option due to the high costs.
  • Thoroughly research any MCA company before applying to check for complaints.
  • Have an experienced attorney review any MCA agreement before signing.
  • Negotiate the best possible terms and understand all costs.
  • Explore other more affordable financing options whenever possible.
  • Monitor cash flow closely and contact the MCA company immediately if repayment issues arise.
  • If you default, consult a lawyer right away regarding Texas law and your options.
  • Consider debt settlement or legal action if the MCA company engages in unlawful collections.

While merchant cash advances can be tempting due to fast approvals and funding, they come with a major risk of spiraling unaffordable debt. Tread carefully and secure legal guidance to protect your interests. With the right education and support, you can make the best financing decisions for your Fort Worth business.

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