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North Dakota Merchant Cash Advance Attorney: What Small Businesses Need to Know

Merchant cash advances have become an increasingly popular form of financing for small businesses in North Dakota. Unlike traditional bank loans, merchant cash advances provide quick access to capital without a lot of paperwork or strict eligibility requirements. However, these advances also come with some major legal risks that business owners should understand before signing on the dotted line.This article provides an overview of merchant cash advances, examines common legal issues surrounding them, and offers tips for North Dakota business owners on finding an attorney to help with merchant cash advance disputes.

What is a Merchant Cash Advance?

A merchant cash advance (MCA) is a form of financing where a company provides a business with an upfront sum of cash in exchange for a percentage of the business‘s future credit card sales.Here’s a quick rundown of how merchant cash advances work:

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  • The business applies and the MCA company evaluates their credit/debit card sales history to approve the advance.
  • If approved, the business receives a lump sum of capital, often between $10,000 – $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.
  • Repayment terms are usually 4-12 months until the advance is paid back in full.

The main advantage of merchant cash advances is that they provide quick access to capital without traditional credit checks or collateral required by banks. The application process is simple and funding can be received in as little as a few days.However, there are also some major downsides that business owners should be aware of.

The Problem with Merchant Cash Advance Interest Rates

One of the biggest issues with merchant cash advances is that they often come with exorbitantly high effective interest rates. Rates of 30-300% APR are common in the industry.


These high rates are partially a result of the MCA repayment process. Unlike a term loan, there is no fixed repayment schedule with a merchant cash advance. The business simply repays a percentage of each day’s credit card sales until the full advance amount plus fees and interest are paid back.This unpredictability means businesses can end up paying back far more than they anticipated. If sales volume is low, repayment drags on and the business ends up paying an extremely high annualized rate on the capital received.

Other Common Legal Issues with Merchant Cash Advances

In addition to high interest rates, some other common legal issues surrounding merchant cash advances include:

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  • Deceptive marketing practices – MCA companies may misrepresent or omit information on repayment terms, total costs, eligibility requirements, and other key details in their marketing materials.
  • Confession of judgment clauses – Many MCA contracts contain clauses where the business owner confesses judgment against themselves if they default on payments. This allows the MCA company to seize assets without notice or due process.
  • Access to business bank accounts – Companies may require access to directly withdraw repayments from the business checking account as a condition of the advance.
  • Short repayment terms – Repayment periods as short as 4-6 months can create cash flow issues for businesses.
  • Personal guarantees and liens – Some MCA companies may require owners to personally guarantee the advance or place liens against their personal property.
  • Lack of transparency – Contracts often lack clear information on repayment amounts, total costs, and other key terms.
  • Unauthorized withdrawals – There are reports of some MCA companies making excessive or unauthorized withdrawals from business accounts.

Why Merchants Need a North Dakota Attorney

With issues like confession of judgment clauses and triple digit interest rates, it’s easy to see why merchant cash advances are often criticized as predatory lending. If you are struggling to repay an advance in North Dakota, having legal counsel can help protect your rights.An attorney experienced with MCA companies can help you:

  • Negotiate a settlement – They may be able to negotiate a lump-sum settlement or payment plan that reduces the total repayment amount.
  • Assess defenses – Based on the specific facts of your case, they can determine if defenses like unconscionability, usury laws, or deceptive practices apply.
  • Understand the contract – They can review the MCA contract and explain your rights, obligations, and options in plain English.
  • Respond to lawsuits – If the MCA company sues for non-payment, an attorney can represent you in court and assert defenses on your behalf.
  • Explore bankruptcy – Filing for bankruptcy may pause collection efforts and discharge qualifying business debts. An attorney can advise if this is a viable option.
  • Cancel ACH access – They can assist with cancelling any access the MCA company has to directly withdraw funds from accounts.
  • Improve future contracts – They can provide tips to protect your interests when entering financing contracts going forward.

Having experienced legal counsel levels the playing field and gives small businesses a fighting chance at reaching a fair resolution when merchant cash advance disputes arise.

Finding a North Dakota Merchant Cash Advance Attorney

If you need legal help related to a merchant cash advance in ND, here are some tips on finding a qualified attorney:

  • Search for attorneys experienced in “commercial litigation” and “financial services law.” Look for ones that specifically mention merchant cash advances in their profiles.
  • Check online reviews and client testimonials to gauge an attorney’s experience with these types of cases.
  • Contact the North Dakota Bar Association referral service for recommendations.
  • Ask other local business owners if they can refer attorneys who have handled MCA cases.
  • Look for lawyers who offer free consultations and flexible payment plans. These cases can be expensive to litigate.
  • Meet with a few attorneys in person to discuss your specific situation before deciding who to hire. Make sure you feel comfortable with them and their knowledge of MCA contracts.
  • Consider lawyers located near you or your business. They will have familiarity with local laws and courts.
  • Check that any attorney you consider is licensed and in good standing with the state bar association.
  • Be prepared to provide a copy of your MCA contract and documentation of payments/withdrawals. This allows attorneys to review the specifics.

With the right legal help, North Dakota small businesses have a fighting chance at resolving merchant cash advance disputes fairly. Don’t hesitate to consult an attorney if you have concerns about predatory lending practices or other issues surrounding your advance agreement. An experienced lawyer can review your case details and contract terms to determine the best course of action.

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