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Virginia Merchant Cash Advance Attorney

Hey there! I wanted to provide some helpful info about merchant cash advances in Virginia, specifically some of the laws and regulations around them. I know this stuff can be really confusing, so I’ll try to break it down in a simple way.First off, what is a merchant cash advance? Basically it’s a way for small businesses to get quick cash by selling a portion of their future credit card sales to an MCA company. The business gets a lump sum upfront, and the MCA company takes a fixed percentage of their credit card revenue until the advance is paid back.

The Pros and Cons of Merchant Cash Advances in Virginia

There’s a few pros and cons to consider with merchant cash advances in VA:Pros:

- -
  • Fast approval and funding – you can get cash in your account in a few days
  • No collateral required like with a bank loan
  • Can be used for any business need – inventory, marketing, payroll, etc.
  • Approval based on credit card sales, not personal credit score

Cons:

  • Very high interest rates, often over 100% APR
  • Daily or weekly payments can strain cash flow
  • If sales drop, payback period extends further
  • Not regulated like loans, so fewer consumer protections

So in a nutshell, MCAs provide quick cash but are extremely expensive compared to other financing options. You gotta weigh the benefits for your specific situation.

Virginia’s Merchant Cash Advance Laws

Now let’s talk about some of the laws and regulations around merchant cash advances in Virginia.In 2022, Virginia passed House Bill 1027 which went into effect on July 1st. This new law does two main things:

  1. Requires MCA companies to register with Virginia’s State Corporation Commission
  2. Requires certain disclosures to be provided before giving a merchant cash advance over $500

This includes disclosing the total amount provided, the fixed daily/weekly amount to be debited, the estimated payback amount, and the estimated payback period.The law also prohibits MCA companies from requiring personal guarantees or confessions of judgement. This helps provide some protection for business owners.However, there are some exceptions. The law doesn’t apply to banks or credit unions, or to merchant cash advances over $500,000.Overall though, Virginia’s new law provides more transparency and helps level the playing field a bit for small businesses looking at merchant cash advances.

Working With a Virginia MCA Attorney

Because merchant cash advances can get legally complicated, it’s always a smart idea to have an attorney review any MCA agreement before signing.Here are some important things a Virginia MCA attorney can help you with:

  • Reviewing the MCA contract – They’ll make sure you understand all the terms and that everything complies with Virginia laws.
  • Negotiating the agreement – An attorney can often negotiate better rates and terms than you could on your own.
  • Resolving disputes – If you run into issues with payments or need to get out of the agreement, an attorney can help resolve disputes.
  • Debt settlement – If the MCA becomes unaffordable, an attorney may be able to negotiate a settlement for less than you owe.
  • Lawsuits – In extreme cases, an attorney can help defend you if the MCA company sues over the debt.

Having experienced legal counsel on your side can provide huge peace of mind when dealing with merchant cash advances. They’ll make sure your rights are protected under Virginia laws.

Alternatives to High-Cost Merchant Cash Advances

While MCAs are certainly an option for quick financing in Virginia, it’s important to look at some lower cost alternatives too:

  • Bank loans – Talk to your bank or credit union about a term loan or business line of credit. Rates are often under 10%.
  • SBA loans – The Small Business Administration guarantees loans that have lower rates/longer terms.
  • Invoice factoring – Sell your unpaid invoices to a factoring company for immediate cash.
  • Business cash advance – Some alternative lenders provide cash advances repaid by a fixed percent of daily card sales.
  • 401(k) business financing – Use your 401(k) or IRA funds to invest in your business.
  • Crowdfunding – Platforms like Kickstarter let you raise funds from customers and fans.
  • Angel investors – Wealthy individuals who provide capital to startups and small businesses.
  • Venture capital – Investment firms that provide growth capital in exchange for equity.

The bottom line is there are plenty of small business financing options to consider beyond high-cost merchant cash advances. Shop around and use a Virginia MCA attorney to understand your options.I hope this overview gives you a good sense of how merchant cash advances work in Virginia, the relevant laws, and some smart alternatives to explore. Don’t hesitate to reach out if you need an attorney’s help negotiating an MCA agreement or resolving any issues that come up. We’re here to protect your interests!

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