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West Virginia Merchant Cash Advance Attorney

Merchant cash advances have become a popular alternative to traditional business loans for many small businesses in West Virginia. Unlike a loan, merchant cash advances provide businesses with quick access to capital in exchange for a percentage of future credit card sales. While merchant cash advances can provide needed funds, they also come with some big risks that business owners need to understand. This article provides an overview of merchant cash advances in West Virginia, key laws and regulations, pros and cons to consider, and the role a merchant cash advance attorney can play.

What is a Merchant Cash Advance?

A merchant cash advance (MCA) is a form of financing where a business receives an upfront sum of cash in exchange for a percentage of future credit card sales. The business repays the advance as customers make credit card purchases. Here’s how it works:

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  • A merchant cash advance company provides a business with an upfront lump sum of cash, often between $5,000-$500,000.
  • In exchange, the business agrees to pay back a fixed percentage of its credit card sales, usually 10-20%, until the advance is repaid in full.
  • The MCA company takes its percentage cut directly from the business’s credit card receipts through a process called factoring.
  • There is no fixed repayment schedule – the business repays the advance as credit card sales come in.

The appeal for many businesses is fast access to capital without having to qualify for a bank loan. However, the costs and risks are often much higher than traditional financing.

MCA Industry in West Virginia

The MCA industry has grown rapidly in West Virginia over the past decade. With struggling coal and manufacturing industries, many small businesses have turned to merchant cash advances as a lifeline to cover payroll, inventory, and other expenses when banks won’t lend. However, some MCA companies engage in predatory lending practices that take advantage of desperate business owners.

According to a 2019 lawsuit filed by the West Virginia Attorney General’s office, some MCA companies charge interest rates over 200% – more than ten times the state’s usury limit. The lawsuit alleges that MCA companies structure their advances to evade state lending laws.

West Virginia lawmakers have tried to rein in abuses through legislation like the Factoring Act, which sets limits on MCA charges. However, loopholes remain and unscrupulous lenders continue to target struggling West Virginia businesses.

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Pros and Cons of Merchant Cash Advances

While merchant cash advances come with risks, they can still be an important source of funding for some West Virginia businesses. Here are some key pros and cons to weigh:


  • Fast funding – Businesses can get an MCA in days or weeks, much faster than a traditional bank loan.
  • Flexible payments – Repayment is tied to credit card sales, so businesses only pay back the MCA when they have revenue coming in.
  • No collateral required – MCAs don’t require collateral like real estate, so more businesses qualify.
  • Poor credit OK – Many MCA lenders work with businesses with poor credit or short operating histories.


  • High cost – MCA rates often translate to 50-200% APR interest when annualized, much higher than a bank loan.
  • Daily repayments – MCA payments are taken daily from credit card receipts, which can strain cash flow.
  • No limits on payments – Some MCA contracts let the lender take very high percentages of daily credit card sales.
  • Short terms – Most MCAs must be repaid within 6-18 months, faster than a multi-year bank loan.

With such high costs and risks, business owners should only consider an MCA as a very last resort. Be sure to shop around and consult an attorney to review any MCA contract before signing.

West Virginia Laws and Regulations

West Virginia has laws in place to regulate merchant cash advances, but loopholes remain that some lenders exploit. Key regulations include:

  • The state’s general usury law caps interest rates at 18% APR for loans under $2,000.
  • The Factoring Act limits MCA charges to 2.5% of the advance amount per 10-day period.
  • The Attorney General argues that MCAs are actually disguised loans subject to state lending laws.
  • However, some MCA companies claim they are purchasing future receivables, not making loans.

The Attorney General has filed lawsuits against some MCA companies like Yellowstone Capital, alleging violations of state lending laws. But other MCA lenders continue operating in legal gray areas.

Many experts argue that stronger protections are needed in West Virginia law to protect small businesses from predatory MCA lending practices. States like California, New York and Virginia have passed bills to increase regulation and transparency for merchant cash advances.

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Should You Work with a Merchant Cash Advance Attorney?

Given the risks and complexities of MCAs, it’s highly advisable for any West Virginia business owner considering one to work with an attorney experienced in this area. An MCA lawyer can help you:

  • Review MCA contracts to identify predatory terms and potential violations of state laws.
  • Negotiate more favorable repayment terms that won’t cripple your cash flow.
  • Develop alternative financing strategies that are less risky and expensive.
  • Dispute any deceptive or illegal MCA practices through regulatory complaints or litigation.
  • Defend against any collections lawsuits resulting from MCA defaults.

Even if you’ve already entered into an MCA, an attorney may be able to get you out of an abusive contract. Don’t go it alone when merchant cash advances can carry such huge risks and hidden costs.

Finding the Right Merchant Cash Advance Attorney

It’s important to find an attorney with specific experience handling merchant cash advances. Look for lawyers who:

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  • Focus on commercial litigation and transactions, not just personal debt relief.
  • Have represented other businesses in MCA disputes and negotiations.
  • Understand both MCA contracts and West Virginia lending laws.
  • Offer flat fees or hourly billing, not just a percentage of any settlement.

Be wary of any attorney who pushes you to immediately file bankruptcy or litigation before reviewing all options. An effective MCA lawyer will start by thoroughly analyzing your contract, finances and goals to develop a tailored action plan.

You can find merchant cash advance attorneys through:

  • West Virginia Bar Association lawyer referral service
  • Online attorney directories like Avvo,, etc.
  • Your local West Virginia small business development center
  • Referrals from other business owners

Schedule consultations with a few lawyers to find one you’re comfortable with. Come prepared with a copy of your MCA contract, bank statements, tax returns and other key financial documentation.

Strategies for Addressing Merchant Cash Advance Issues

If you’re struggling with a predatory merchant cash advance, an attorney can pursue multiple strategies to protect your business. Common options include:

Renegotiating the MCA Contract

If the MCA terms are severely straining your business’s finances, your lawyer may be able to negotiate a settlement. This could involve reducing the daily repayment percentage taken from your credit card receipts. Or you may be able to extend the repayment term to reduce the impact on your cash flow.

Disputing Potential Violations of State Law

Your attorney can review your MCA contract to spot potential violations of West Virginia lending laws. This may include excessive interest rates beyond legal limits or improperly structuring the agreement as a purchase rather than a loan. Your lawyer can then dispute these violations through regulatory complaints or a lawsuit.

Asserting Defenses in Collections Lawsuits

If you default on an MCA, the lender may sue your business for repayment. Your attorney can defend against collections lawsuits by asserting defenses like usury law violations, deceptive trade practices, or breach of contract by the MCA company.

Filing for Bankruptcy

In some cases, filing for Chapter 7 or Chapter 11 bankruptcy may be the most viable option to discharge or restructure an unpayable MCA debt. An experienced business bankruptcy lawyer can advise if this path makes sense.

Securing Alternative Financing

Your attorney may recommend alternatives to replace your costly merchant cash advance with more responsible financing. Options might include a bank loan, SBA loan, business credit cards, or family loans on more favorable terms.

What to Know Before Getting a Merchant Cash Advance

If you’re considering a merchant cash advance for your West Virginia business, be sure to:

  • Shop around and compare offers from multiple MCA companies.
  • Consult an attorney to review the contract and ensure it complies with state laws.
  • Review the repayment terms closely – know the daily percentage that will be taken.
  • Calculate the annualized interest rate based on total fees paid.
  • Ask the MCA company to provide average repayment durations and default rates.
  • Have a plan to repay quickly; don’t let it drag on at high rates.
  • Avoid “stacking” multiple MCAs that can spiral out of control.

With professional legal advice, you can make an informed decision on whether a merchant cash advance makes sense for your situation. If you do move forward, work with an attorney to negotiate the best possible terms.

The Bottom Line

Merchant cash advances carry major risks and should be a last resort for West Virginia businesses needing funds. Work with an experienced attorney to review any MCA offer, negotiate better terms, and understand your rights under state laws. With legal guidance, you can make smart financing choices to keep your business on sound financial footing.

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