Missouri Merchant Cash Advance Legal Help – Attorneys for Debt Settlement
Merchant cash advances can seem like quick and easy money for small businesses, but they often come with predatory terms and sky-high interest rates. If you’re a Missouri business owner who took out a merchant cash advance and is now facing aggressive collection tactics or even a lawsuit, you need an experienced attorney on your side.
How Missouri Merchant Cash Advances Work
A merchant cash advance provides a business with an upfront lump sum of cash in exchange for a percentage of future credit card sales. It is not technically a loan under Missouri law since the business is selling a portion of its future receivables. However, merchant cash advance companies still charge very high effective interest rates.Here’s a simple example:
-- ABC Company needs $100,000 quickly for an expansion.
- XYZ Merchant Cash Advance offers $100,000 in exchange for 15% of ABC Company’s credit card sales until XYZ collects $150,000.
- That means XYZ is charging $50,000 for the use of $100,000 over an undefined period of time. The annualized interest rate could easily exceed 100% APR.
While merchant cash advances avoid Missouri usury laws that cap interest rates on loans, the fixed daily payments can still sink a struggling small business.
Common Legal Issues with Missouri Merchant Cash Advances
There are several common problems Missouri businesses run into with merchant cash advance companies:
- Deceptively High Interest Rates – While merchant cash advances aren’t “loans”, the returns can translate into triple-digit interest rates.
- Aggressive Collections – MCA companies will aggressively collect daily payments, even if it sinks the business. Some unlawfully threaten business owners.
- Costly Lawsuits – MCA companies frequently sue Missouri businesses for breaching the MCA contract if they fall behind on payments.
- Confessions of Judgement – Many MCA contracts contain illegal confessions of judgement that allow the MCA company to seize assets without notice.
Reputable St. Louis business attorneys can review MCA contracts to spot illegal terms. They can also defend Missouri companies from aggressive collection efforts and lawsuits.
Missouri Merchant Cash Advance Defenses
There are several defenses Missouri attorneys use to protect businesses from merchant cash advance abuse:
-- Usury – Argue the MCA’s rates and terms violate Missouri usury laws on loans over 21% APR.
- Unconscionability – Challenge whether it’s fair and reasonable for small businesses to accept such one-sided MCA terms.
- Fraudulent Inducement – Argue the MCA company misled the business about costs, obligations, or other terms to secure the contract.
- Breach of Contract – If the MCA varied from the contracted terms, argue they breached first.
- Unjust Enrichment – Argue that letting the MCA company collect excessive returns is obviously unjust.
A skilled Kansas City business litigation lawyer can evaluate which defenses apply to your situation. They may also be able to negotiate a settlement.
Working with a Missouri Merchant Cash Advance Attorney
If you are facing aggressive collection efforts or legal action over a Missouri merchant cash advance, contact an experienced business attorney right away. Look for lawyers that specialize in financial services litigation and regularly handle MCA cases.A good Missouri MCA attorney will:
- Review your merchant cash advance contract for illegal terms.
- Assess possible defenses based on Missouri laws and case precedents.
- Handle negotiations with the MCA company.
- Defend against any collection lawsuits or arbitration claims.
- Explore options for debt relief or restructuring if necessary.
Don’t wait until you are served with legal papers to seek help. The sooner you have an attorney reviewing your MCA agreement, the better positioned you’ll be. Missouri laws do provide some important protections if you have the right legal advice on your side.