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New York Merchant Cash Advance Lawyers Can Provide Debt Relief

Running a small business is tough. You have to worry about paying employees, keeping customers happy, managing inventory, and a million other things. With all those plates spinning, it can be tempting to take out a merchant cash advance loan to keep things running. But those loans come with sky high interest rates and aggressive collection tactics if you fall behind. If you took out a merchant cash advance loan in New York and are struggling to pay it back, there are debt relief options available. Keep reading to learn more.

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How Merchant Cash Advances Work

A merchant cash advance (MCA) works differently than a traditional small business loan. With an MCA, you get an upfront lump sum payment in exchange for a percentage of your future credit card and debit card sales. There’s no set repayment schedule – the MCA company takes a fixed percent of your daily credit card receipts until the balance has been repaid (plus fees and interest that can bring the annualized cost up over 100%).The advantage is quick access to capital without having to qualify based on your personal credit history. The downside comes if your business has a slow period – you still owe the fixed daily amount even if sales drop. And if you can’t pay, the MCA company can raid your bank accounts directly or sue you.

New York Has Passed Laws Regulating MCAs

After many complaints about predatory lending practices, New York imposed regulations on merchant cash advance companies with the Merchant Cash Advance Act in 2020. The law:

  • Caps interest rates at 25% annualized
  • Limits fees to 2.5% per advance
  • Requires clear disclosure of repayment terms
  • Gives business owners the right to cancel within 5 days

While this helps, it doesn’t erase the massive debts owed by small businesses who took out MCAs before 2020. Many are still struggling under crushing repayment terms.

There Are Legal Defenses Against Predatory MCA Loans

If you’re facing aggressive collection tactics from an MCA company, don’t assume you have no choice but to pay. There may be legal defenses that can invalidate the agreement or reduce what you owe. Potential claims include:

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Unconscionable contract terms

If the fees, rates, or repayment structure are excessively one-sided or abusive, the contract may be ruled unconscionable. This would invalidate the obligation to repay.

Deceptive practices

If the MCA company misled you about repayment terms, failed to adequately explain fees, or engaged in high pressure tactics, that may invalidate the contract.

Usury law violations

Even with New York capping rates at 25%, many MCA contracts from before 2020 break state usury laws. This may invalidate the agreement.

Breach of covenant of good faith

MCA companies have a legal duty to treat customers fairly. Aggressive collections or refusing to work with borrowers facing hardship may violate this covenant, again invalidating the contract.

New York Merchant Cash Advance Lawyers Can Help

Don’t face an aggressive MCA company alone. Retaining a lawyer experienced with merchant cash advances can make all the difference. They understand the applicable laws and typical contract terms and can evaluate if you have grounds to challenge repayment. Where possible, they work to negotiate settlements for substantially less than claimed balances. And if necessary, they litigate defenses to tie up collections in court.The key is acting quickly once an MCA company initiates collections. This is where an attorney can freeze action and then work to build leverage. The longer an invalid contract goes unchallenged, the harder it becomes to fight back. So if you receive a default notice or are facing aggressive collections on an MCA loan in NY, move fast to understand your rights.

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Options for New York Small Business Debt Relief

If you don’t have grounds to invalidate the MCA contract, all hope is not lost. There are still options to reduce balances and ease crushing repayment pressure:

Debt consolidation loans

Borrowing money at lower rates to pay off the MCA loan shrinking the amount owed each month. Bankscredit unions, and online lenders offer various small business loan products that may help consolidate merchant cash advance balances. Shop around for the best terms.

Hardship programs

Some MCA lenders offer hardship assistance for borrowers facing temporary financial struggles. This may include reduced payments for several months. Ask if any relief programs exist.

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Debt settlement

If total balances are more than you could reasonably repay in 3 years, settling for less may be an option. Specialist lawyers often negotiate settlements for 30 to 60% of large MCA balances. The agreements release borrowers from further collections after a lump sum payment.


As an absolute last resort, filing Chapter 7 or Chapter 11 bankruptcy stops collections and discharges qualifying business debts. An experienced attorney can advise if this extreme step is appropriate.

Don’t Struggle Alone. Get Help From New York MCA Lawyers.

Falling behind on merchant cash advance repayments feels scary and stressful. But you have more options than lenders want you to believe. Connecting with lawyers in New York familiar with MCA agreements opens doors for defending against invalid contracts, negotiating settlements, and finding alternative debt relief. Reach out today to understand your rights and chart a path forward.



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