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Massachusetts Merchant Cash Advance Attorney

Hey there, my name is John and I wanted to have a conversation with you about merchant cash advances in Massachusetts. I know this can be a tricky subject, especially if you feel like you’ve been taken advantage of by a predatory lender. I’m an attorney here in Massachusetts and I help folks in these situations all the time.

Let’s start with the basics – what is a merchant cash advance? Well, it’s a form of financing where a company gives you an upfront lump sum of cash in exchange for a percentage of your future credit card and debit card sales. Some key things to know:

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  • The lump sum is not considered a “loan” but rather the “purchase of future receivables.” This allows the companies to charge higher rates.
  • There’s usually no set repayment schedule – the company takes a fixed percentage of your daily credit card sales until the balance is repaid.
  • The effective APR is often well over 100%, sometimes up to 300%. Much higher than a bank loan.

Now, you might be wondering – how is this legal when loans over 20% APR are illegal in Massachusetts[1]? Well, that’s where things get tricky. Because merchant cash advances technically aren’t “loans”, lenders exploit this loophole in the law to charge astronomical rates.

While they can be beneficial in some cases, I’ve seen way too many businesses here in Massachusetts struggle with predatory merchant cash advances. The rates and terms are downright abusive. And when you can’t repay – which is common – they’ll sue you, put liens on your assets, garnish wages, freeze bank accounts – whatever it takes to get their money back.

I know how stressful and scary this can be. These companies rely on intimidation tactics. But here’s the good news – you have rights under Massachusetts law and there are defenses available to you. I can help you fight back.

Challenging Predatory Merchant Cash Advances in Massachusetts

Now, I don’t want to make promises I can’t keep. Every situation is different. But in many cases, we can fight these predatory merchant cash advances. There are a few main arguments we can make:

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  1. The rates and terms are unconscionable. This means they are so unfair and one-sided that courts should not enforce the agreement.
  2. The company violated state laws like the Massachusetts Credit Cost Disclosure Act[2], which requires lenders to clearly disclose APRs and total costs.
  3. The agreement violates public policy meant to protect consumers and small businesses.
  4. There are procedural flaws in the contract or the way it was executed that make it invalid.

Now, here’s the thing. These companies know the arguments we can make. So they’ve gotten very savvy about avoiding anything that looks like an “unconscionable” contract. They disclose just enough to say they complied with the law. And the contracts themselves are ironclad.

But that doesn’t mean we don’t have options. We dig into the facts of each case. We look for any flaws in the process or ways the company misled you. Anything we can use to fight the agreement itself or reduce the amount owed.

And here’s something many folks don’t realize. Even if the contract holds up, you still have defenses against collection. Things like…

  • Violations of debt collection laws
  • Issues with the way they went about suing you or obtaining a judgment
  • Problems with liens they placed on your assets

My point is this. Don’t assume you have no recourse just because you signed their agreement. We can still fight back.

Strategies for Dealing with Merchant Cash Advance Companies

Now, I don’t want to sugar coat things. These situations are tough. And messy. The companies are ruthless. Your best case is often settling for less than you owe. But far better than the alternative.

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Based on my experience, here are some of the best strategies for dealing with merchant cash advance companies:

  1. First, stop ignoring them. I know it’s tempting to stick your head in the sand. But that gives them the upper hand. You need to engage.
  2. Be upfront about your struggles. Explain you want to pay them back, but the terms are impossible for your business. Appeal to their humanity. Believe it or not, some of them will work with you if they think it’s better than getting nothing.
  3. Have a CPA analyze your finances and expected future cash flows. Use this to come up with a reasonable settlement offer based on what you can actually afford.
  4. Offer to settle for a lump sum payment up front if you can get family help or tap other sources. Even 50 cents on the dollar upfront saves them collection costs.
  5. Propose a reduced fixed monthly payment plan. This gives them predictable cash flow vs. variable daily payments.
  6. Threaten bankruptcy or legal action as leverage, but avoid outright threats or hostility. You catch more flies with honey.
  7. If talks fail, don’t hesitate to contact an attorney experienced with these cases. The right lawyer makes a huge difference.

The key is showing them it’s better to make a deal than ruin your business and get zero. It’s amazing how flexible they can get when you have the right approach.

Protect Yourself from Merchant Cash Advance Abuse

Before I wrap up, let me offer some quick tips to avoid merchant cash advance problems in the first place:

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  • Exhaust other financing options first like traditional bank loans or SBA programs.
  • Consult an accountant to analyze the true cost and cash flow impact.
  • Have an attorney review the contract and advise you of your rights before signing.
  • Make sure you fully understand the terms, especially the repayment process.
  • Negotiate the rate, repayment percentage, and other terms whenever possible.
  • Only use as temporary help to get through a rough patch, not long term financing.

I hope this gives you a good overview of how merchant cash advances work here in Massachusetts and what to watch out for. My passion is helping business owners protect themselves and fight back when these agreements go sideways. So reach out anytime! I’m always happy to help.

Stay strong,


[1] Massachusetts General Law Chapter 140, Section 96

[2] Massachusetts Credit Cost Disclosure Act

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