Long Beach Merchant Cash Advance Legal Help – Attorneys Can Advise
Merchant cash advances (MCAs) can provide quick funding for small businesses, but they also come with risks. If your Long Beach business took an MCA and is now facing legal issues, working with an attorney may help. This article covers common legal situations around merchant cash advances and how lawyers can assist.
Understanding Merchant Cash Advances
A merchant cash advance isn’t technically a loan. Instead, an MCA provider gives you an upfront sum in exchange for a percentage of your future credit card sales over a fixed period, often 6-18 months. There’s usually no fixed repayment schedule – you pay back the advance as a percentage of daily credit card receipts.The lack of underwriting and quick funding makes MCAs appealing. However, their expense can cause legal issues for merchants down the road. Attorneys can provide guidance if your business runs into the following problems:
-Repayment and Collection Issues
MCA agreements often have daily repayment rates of 10-20% of credit card sales. This can become difficult for merchants if business slows. Unfortunately, some MCA providers resort to aggressive collection tactics like:
- Harassing phone calls
- Freezing bank accounts
- Attempting to collect directly from your merchant processor
Debt collection laws prohibit deceptive and abusive practices. An attorney can review your agreement and situation to see if the MCA company is overstepping legal bounds. They may be able to negotiate alternative repayment terms or aid in disputing any unfair collections.
Unfair Contract Terms
Merchant cash advance agreements range from straightforward to downright predatory. Some include:
- Excessively high repayment rates
- Overbroad confessions of judgement
- Personal guarantees/liability from business owners
Several states have introduced regulation around MCA products to protect small businesses. However, oversight remains light overall.If you didn’t fully understand your MCA contract or feel it’s unfair, discuss the specifics with a lawyer. They can assess if you have grounds to invalidate any problematic clauses under laws like California’s Unfair Competition Law.
-Processor Issues
To receive daily payments, MCA providers gain access to debit merchant processing accounts directly. Some providers have been known to:
- Improperly debit accounts
- Refuse to remove debits even after contracts end
- Switch processors without merchant permission
Processor access also leaves merchants vulnerable if the MCA company goes out of business or tries to transfer the agreement.Attorneys can review your processor statements and agreements to stop any unauthorized charges. They can also represent you in getting the MCA company removed from your merchant account.
Debt Relief Options
If an MCA has become unmanageable, a lawyer can advise on debt relief approaches like:
- Settlements – The MCA provider agrees to accept a lump-sum payment for less than what’s owed. Attorneys negotiate and finalize settlement agreements.
- Bankruptcy – Filing for Chapter 7 or Chapter 11 bankruptcy can discharge qualifying business debts. Lawyers handle navigating the complex bankruptcy process.
Finding Legal Help
The American Bar Association provides tips on vetting MCA offers thoroughly upfront. But if you already face legal issues from an agreement, here are good options to discuss your situation:
- Business attorneys – Lawyers focusing on commercial transactions can review contracts.
- Debt relief lawyers – Attorneys specializing in debt settlement/bankruptcy can advise on those avenues.
- Litigators – Law firms handling lender disputes may be able to represent you in lawsuits.
When researching lawyers, check credentials and experience in your state. Many offer free consultations to evaluate your case. Be prepared to provide:
-- Copies of your MCA contract and communications
- Processor statements showing payments/debits
- Documentation on any legal interactions so far
Don’t Face MCA Problems Alone
As a small business owner, you want to focus on serving customers – not untangling predatory financing agreements. If an MCA provider has treated your company unfairly or caused financial distress, legal help can make a big difference. Consult with attorneys to understand your rights and map out solutions. With the right advice, you can resolve MCA issues and move forward on steadier financial footing.