Georgia Merchant Cash Advance Legal Help
Merchant cash advances can seem like easy money for small business owners in Georgia. You get an upfront lump sum of cash quickly with no credit check. But those high fees and daily repayment rates can sink a business if you aren’t careful. What legal rights do Georgia companies have when dealing with predatory merchant cash advance (MCA) lenders? And where can you turn for help if you feel trapped in a bad MCA agreement? This article breaks it down.
The Wild West of Business Financing
The MCA industry kinda operates in the wild west when it comes to regulations and consumer protections, ya know? These lenders structure advances to avoid caps on interest rates and fees that apply to bank loans and credit cards. And they can use aggressive collection tactics that might violate fair lending laws if they were banks.But they’re not banks. Merchant cash advance companies say what they offer isn’t technically a “loan” at all. So consumer protection laws don’t really apply. And the contracts hide the true costs of an MCA with terms like “daily repayment rate” instead of interest rate. Many small biz owners don’t realize just how much they’re paying until it’s too late.
-Do Georgia Usury Laws Apply?
Georgia has usury laws capping the maximum allowable interest rate on loans at 16% per year. But MCA lenders get around this by saying what they offer isn’t a “loan” but rather the purchase of a percentage of future sales.Still seems predatory, though, right? Some judges have ruled in favor of borrowers who sued MCA companies for violating state lending laws. But most cases settle out of court. So there still isn’t a clear legal consensus on this issue in Georgia.
Unfair and Deceptive Practices
Even if MCAs technically fall outside Georgia’s usury laws, that doesn’t give lenders a free pass to engage in unfair, deceptive, or abusive practices. Under the Georgia Fair Business Practices Act, consumers can sue companies that:
- Misrepresent the cost, terms, benefits, or incentives of their product
- Use high-pressure sales tactics or harassment
- Fail to honor written agreements
- Threaten legal action they don’t actually intend to take
Too many MCA companies rely on obscure contract language and verbal promises that vanish after signing. If this happens to your business, speak with an attorney about your rights under state consumer protection laws.
Getting Out of an Abusive MCA Agreement
Did an MCA company clearly mislead you about repayment rates, total costs, or anything else? You may be able to void the contract under Georgia law. An experienced business attorney can review your agreement and advise whether you have grounds to terminate it.If the contract is valid but you can no longer afford payments, ask the lender if they’ll agree to settle for less than the full amount owed. Many will accept 70 cents on the dollar or so rather than risk getting nothing in bankruptcy court.
-Finding the Right Legal Help
Navigating merchant cash advance laws and regulations takes an attorney experienced with this unique corner of small business financing. Avvo and LawInfo can help you find top-rated lawyers in Georgia to review your MCA agreement and discuss options. Look for someone well-versed in state lending laws, consumer protections, and contract disputes.And don’t wait until an aggressive MCA company sues your business or tries empty threats of criminal action. Know your rights upfront before signing anything! Because while merchant cash advances can solve short-term cash flow issues, you gotta watch your back with some of these predatory lenders.
What About Bankruptcy?
If legal action fails to resolve an unpayable merchant cash advance debt, bankruptcy may be the last resort. Which chapter makes the most sense depends on your business structure:Chapter 7 bankruptcy – Liquidates the company’s assets to pay creditors. Owners are not personally responsible for business debts (unless they personally guaranteed the MCA). But the company must shut down.Chapter 11 bankruptcy – Attempts to restructure debts so the business can stay open. More complex and expensive than Chapter 7, but allows owners to retain control.Chapter 13 bankruptcy – An option for sole proprietorships and very small businesses. Allows 3-5 years to repay debts under court protection. Less drastic than Chapter 7 liquidation.Talk to a bankruptcy attorney about the pros, cons, and costs of each strategy. Wiping an oppressive MCA debt clean through bankruptcy may allow you to rebuild your business on a more solid financial foundation.
Beware MCA Collections Abuse
What happens if you fall behind on merchant cash advance payments? Many lenders hire aggressive third-party debt collectors who might:
- Call repeatedly at unreasonable hours
- Use profane or abusive language
- Falsely threaten legal action
- Contact your customers about the debt
Under the Fair Debt Collection Practices Act, collectors cannot harass or deceive you, or make empty threats. If an MCA debt collector crosses the line:
- Send a written “cease and desist” letter demanding they stop contact
- Report violations to the Georgia Attorney General
- Consult a consumer protection attorney about suing for damages
You have rights even when dealing with aggressive debt collectors hired by merchant cash advance companies. Don’t let them intimidate you into paying more than you can afford.
-Finding the Right Help for Your Business
If you feel trapped in an abusive MCA agreement, stay calm and know that options exist. A qualified Georgia attorney can review your contract and advise the best path forward. Laws and legal precedents around merchant cash advances remain unsettled. But more judges rule in favor of fair lending practices every year.Don’t struggle alone against predatory MCA tactics that could sink your business. Help exists – you just need to know where to find it. The lawyers at Avvo, FindLaw, and LawInfo can get your business back on track and headed toward a brighter future.