Merchant cash advances can be a great financing option for small businesses, but they also come with legal risks. If you’re a Minneapolis business owner who has run into issues with your merchant cash advance provider, you may need legal help to resolve the situation. Here’s an overview of common merchant cash advance legal issues in Minneapolis and how an attorney can assist.
Understanding Minneapolis Merchant Cash Advance Laws
Minnesota has specific laws regulating merchant cash advances (MCAs). Some key aspects include:
-- Interest rate caps – MCAs are not considered loans under Minnesota law, so they are not subject to state usury caps on interest rates. However, some city ordinances impose rate limitations. For example, Minneapolis caps interest rates on MCAs at 8 percentage points above the Federal Reserve discount rate.
- Disclosure requirements – MCA providers must disclose certain information before finalizing an agreement, like the advance amount, fees, payment amount and frequency, and more. Failure to properly disclose can make the agreement void.
- Unfair practices – State consumer protection laws prohibit unfair or deceptive conduct in MCA transactions. This provides recourse if a provider uses predatory tactics.
Understanding these laws is the first step in determining your rights and options for challenging any issues with your MCA company. An attorney can advise if your agreement violates any Minneapolis or Minnesota statutes.
Common Minneapolis MCA Legal Issues
Some typical legal issues that can arise with Minneapolis merchant cash advances include:
Excessive Rates & Fees
Some MCA companies charge excessively high rates and fees that violate industry standards or Minneapolis interest rate ordinances. An attorney can review your agreement and fees to determine if you have grounds to dispute excessive costs.
Non-Disclosure of Terms
If an MCA provider fails to properly disclose fees, the payment amount, the advance amount, or other terms, the agreement may be void. This means you could have grounds to invalidate the agreement and not repay the advance.
-Breach of Contract
Sometimes providers violate terms of MCA agreements, like suddenly raising daily repayment amounts without notice. This could constitute breach of contract, again giving you leverage to fight the agreement.
Unfair Lending Practices
If a provider misled you about costs or terms, strong-armed you into accepting an MCA, or engaged in other unfair tactics, state and federal consumer protection laws may provide recourse.
Aggressive Collections
Merchant cash advance companies sometimes use aggressive collections tactics like harassing calls or unlawfully accessing your accounts. There are laws prohibiting such conduct.
Working with a Minneapolis MCA Attorney
If you suspect unfair or unlawful conduct by a merchant cash advance provider, contacting an attorney is wise. Here’s how an attorney can help:
- Reviewing the MCA agreement – Analyzing terms, fees, disclosures, and other aspects to uncover potential violations.
- Assessing your rights and options – Determining the strongest legal arguments to fight the MCA or provider conduct.
- Negotiating a settlement – Leveraging those arguments to negotiate a reduced payoff amount or favorable settlement.
- Pursuing litigation – If necessary, filing lawsuits over contractual breaches, insufficient disclosures, or illegal lending practices.
- Defending collections – Responding to unlawful collections efforts and halting harassment.
- Facilitating refinancing – Helping replace predatory MCAs with fairer forms of small business financing.
Having an experienced lawyer in your corner levels the playing field against unscrupulous merchant cash advance companies. They understand Minneapolis laws and can deploy the most effective strategies for blocking unfair agreements and stopping mistreatment. Don’t hesitate to discuss your situation with an attorney before it escalates.
-Finding Minneapolis MCA Legal Help
If you need legal assistance with your Minneapolis merchant cash advance, where can you turn? Here are good options for finding a qualified lawyer:
Minneapolis Consumer Law Firms
Look for Minneapolis law firms focusing specifically on consumer law, consumer rights, and financial disputes. They frequently handle MCA issues and understand applicable state and city statutes. Avvo, LawInfo, and FindLaw all list qualified local consumer attorneys.
Minnesota Bar Association
Contact the Minnesota State Bar Association or Hennepin County Bar Association for referrals to Minneapolis lawyers with experience fighting merchant cash advance issues.
-Ask Other Local Businesses
Talk to other Minneapolis small business owners about legal challenges with MCA companies. They may recommend attorneys who successfully assisted them.Meeting with one or more lawyers for a free initial consultation is wise. This lets you evaluate expertise and compatibility so you can make the best choice for your situation. With an experienced attorney assisting you, there are many ways to challenge predatory or illegal MCA conduct. Don’t endure mistreatment – fight back.