Wisconsin Merchant Cash Advance Legal Help
Running a small business is tough. Between managing employees, keeping up with regulations, and trying to turn a profit, it’s easy to get overwhelmed. Many business owners in Wisconsin have turned to merchant cash advances to help ease some of their financial burdens.
But merchant cash advances come with their own set of problems. The terms are often confusing, interest rates are sky-high, and some lenders use predatory tactics to take advantage of business owners who are already struggling. If you feel like you’ve been wronged by a merchant cash advance company, don’t worry – help is out there.
Understanding Merchant Cash Advances
A merchant cash advance is kinda like a business loan, but not really. Instead of lending you money that you pay back with interest, the company basically buys your future sales.
It works like this:
-- You agree to give the merchant cash advance company a percentage of your daily credit card sales until they “recoup” the money they gave you, plus a fee. So if they give you $10,000, they may take 15% of your daily sales until they get like $15,000 back.
- There’s no set repayment schedule – they just keep taking their cut every day until the balance has been repaid. This means that if sales are down one month, it will take longer to pay back the advance.
- The fees and percentages can really add up, so you end up paying back way more than you borrowed. That’s how the lenders make their money.
This type of financing can help business owners cover short-term cash flow issues. But it’s also easy to get trapped in an endless cycle of debt with these advances.Many merchants realize too late that the terms they agreed to are unfair or deceptive. That’s when they start looking for legal help.
Common Legal Issues with Merchant Cash Advances
There are a few common problems that business owners run into with merchant cash advance companies:
1. Failure to Disclose Terms
Some lenders don’t adequately explain how much the business will end up repaying or how the daily repayments work. They may even intentionally mislead merchants about potential costs.
2. Excessively High Fees
The fees, interest rates, and payment processing costs can be outrageous – sometimes exceeding 100% APR! Wisconsin has laws about unconscionably high credit costs.
-3. Aggressive Collection Tactics
When merchants fall behind on payments, some cash advance providers resort to questionable collection methods like remotely accessing the merchant’s bank account or demanding lump sum repayment.
4. Violations of Lending Laws
These financing agreements may violate state laws about allowable interest rates, lending practices, unfair contract terms, debt collection abuse, and more.If any of these issues sound familiar, you may have cause for legal action. An attorney can review your agreement and practices to identify any violations.
Fighting Back Against Predatory Lenders
The good news is that merchants do have rights when it comes to merchant cash advances. And the law provides remedies when those rights are violated. Possible options include:
- Suing for violations of lending laws
- Disputing unfair contract terms
- Stopping abusive collections activities
- Recovering excess interest and fees
- Getting the contract voided or modified
Don’t struggle alone against predatory lenders! An experienced business finance attorney can stand up for your rights.