Missouri Merchant Cash Advance Attorney
Merchant cash advances, also known as MCAs, have become a popular alternative financing option for small businesses in Missouri. However, these advances come with some major drawbacks that business owners should understand before signing on the dotted line. This article will examine merchant cash advances in Missouri, including laws and regulations, common issues faced by business owners, and how a knowledgeable Missouri MCA attorney can help.
What is a Merchant Cash Advance?
A merchant cash advance provides an upfront lump sum of capital to a business in exchange for a percentage of future credit card sales. It works like this:
-- Business owner receives a cash advance, usually between $5,000 – $500,000
- The MCA company takes a fixed percentage of daily credit card receipts as repayment
- Amounts are automatically withdrawn daily until advance is paid off
- Repayment amounts vary based on credit card sales volume
Unlike a small business loan, merchant cash advances don’t have fixed monthly payments or set repayment terms. The daily payments fluctuate based on sales, which can become problematic if revenues drop.
MCA Industry in Missouri
Missouri currently does not regulate or license merchant cash advance companies. This leaves business owners vulnerable to predatory lenders charging excessively high rates and fees.According to a 2022 report, Missouri had over 1,200 MCA companies operating in the state, with most based out-of-state
. The lack of oversight means many MCA providers get away with egregious practices, like:
- Rates exceeding 100% APR
- Misrepresenting the true cost of the advance
- Requiring unreasonable fixed daily payments
- Aggressive collection tactics
This predatory lending often leaves Missouri business owners owing 2-4 times the amount they originally received.
-Missouri MCA Laws and Regulations
While Missouri doesn’t specifically regulate merchant cash advances, some laws still apply:
- Usury laws – Missouri caps interest rates on loans under $5,000 at 36% APR. MCA’s may violate this if deemed a loan.
- Lender registration – MCA companies making loans in Missouri may need to register as a lender with the Missouri Division of Finance.
- Debt collection laws – MCA providers must follow Missouri and federal debt collection laws. Illegal practices can invalidate the agreement.
- Consumer protection laws – Misrepresentation of terms or failure to disclose fees/rates may violate Missouri consumer protection statutes.
Having an attorney review the MCA agreement for violations of Missouri laws can provide leverage when trying to negotiate a settlement.
Common Missouri MCA Issues Faced by Business Owners
Many Missouri business owners fall victim to predatory practices by MCA companies, including:
- Deceptively high rates/fees – MCA’s often charge equivalent interest rates over 100% APR without disclosing it.
- Repayment amounts unrelated to sales – Some providers require fixed daily payments regardless of credit card volume. This can break the business if sales drop.
- Personal guarantees required – Business owners may have to sign a personal guarantee, leaving personal assets at risk if the MCA defaults.
- Confessions of judgement – MCA contracts sometimes contain a confession of judgement clause, allowing them to obtain a judgement without notice.
- Lack of transparency – Vague contract terms, hidden fees, and misrepresented information about repayment.
- Aggressive collections – Threats of lawsuits, freezing bank accounts, contacting customers, and harming the business’ reputation.
How a Missouri MCA Attorney Can Help
Hiring an experienced Missouri MCA attorney is the best way for business owners to address merchant cash advance difficulties. Here are some of the ways a knowledgeable lawyer can assist:
- Review the MCA agreement – Identify prohibited terms, interest rates/fees above Missouri limits, and failure to properly register as a lender. This provides leverage when negotiating.
- Negotiate with the MCA provider – Work towards a settlement or payment plan that is affordable based on the business’ current sales and financial situation.
- Defend against lawsuits – Fight back against any lawsuits filed for nonpayment. Raise defenses like usury violations, improper registration, or use of unlawful terms.
- Stop collections – Send cease and desist letters to stop harassment from MCA providers. Sue them if they violate debt collection laws.
- Dispute reporting to credit bureaus – Ensure improper reporting about the MCA does not damage the business’ credit rating.
- Explore bankruptcy options – File Chapter 7 or Chapter 13 bankruptcy to eliminate or reduce the amount owed if necessary.
- Cancel confessions of judgement – Remove any improperly obtained confessions of judgement against the business.
- Remove personal liability – Argue that personal guarantees in MCA contracts are unenforceable.
- Demand refund of overpayments – If it’s found the business overpaid on the MCA due to unlawful terms, demand those amounts be refunded.
Finding the Right Missouri MCA Attorney
It’s important to choose an attorney with specific experience handling Missouri merchant cash advances. Here are some key questions to ask during your search:
-- How many years have you negotiated MCA settlements in Missouri?
- Do you regularly defend Missouri business owners against MCA lawsuits and collections?
- Are you familiar with Missouri laws as they relate to MCA’s?
- Will you review my agreement for violations at no cost?
- Can you provide references from past Missouri MCA clients?
Look for lawyers that offer free consultations and case reviews. Be sure you understand their fees before retaining them.
Act Fast to Protect Your Rights
If you’re a Missouri business owner struggling to repay a merchant cash advance, take action quickly. Contact an experienced Missouri MCA attorney right away before the provider can exercise confessions of judgement, freeze your accounts, or sue your business. An attorney can negotiate a settlement and defend your rights under Missouri law. Don’t wait until it’s too late.