Nevada Merchant Cash Advance Attorney – A Helpful Guide for Small Businesses
Merchant cash advances have become a popular alternative to traditional small business loans in recent years. A merchant cash advance provides a business with an upfront sum of money in exchange for a percentage of future credit card sales. This can seem like an attractive option for Nevada businesses that need quick funding and may not qualify for a bank loan. However, merchant cash advances also come with some major drawbacks that business owners should understand before signing an agreement.
How Merchant Cash Advances Work
A merchant cash advance provides funding upfront in exchange for a fixed percentage of future credit card sales over a set period of time. The advantages are:
-- Funding is provided quickly, sometimes in as little as 24 hours
- There are fewer eligibility requirements than bank loans
- Payments adjust up and down with sales
However, the costs and risks are much higher compared to traditional loans.
High Costs and Risks
While merchant cash advances seem easy to obtain, the costs are extremely high. Advances typically have an annual percentage rate between 60-200%, much higher than even credit cards or online lenders. Other risks include:
- Daily payments are taken regardless of actual sales, which can quickly drain a business’s accounts
- It’s easy to get trapped in debt cycles, taking new advances to pay off old ones
- Advances have vague terms that let providers change payments and seize assets if they aren’t satisfied
- Providers have first priority access to credit card sales ahead of other expenses
Unfortunately, many Nevada business owners don’t realize how dangerous merchant cash advance agreements can be until it’s too late. That’s why it‘s critical to have an experienced attorney review any proposed agreement first.
How a Nevada Merchant Cash Advance Attorney Can Help
A merchant cash advance attorney understands the legal side of these complex financial products. They can help Nevada business owners in several important ways:
-- Review the full agreement and explain all terms, costs, conditions and risks in plain language
- Negotiate more favorable terms like lower payments or longer repayment periods
- Add protective provisions to the agreement
- Develop strategies to limit personal liability if the business defaults
- Dispute predatory lending practices
- Defend against collection lawsuits and asset seizures
Having an attorney involved before signing an agreement can potentially save a Nevada business owner thousands of dollars and prevent devastating lawsuits down the road.
Important Nevada Legal Protections
There are also some important Nevada laws that provide protections around merchant cash advances:
- Nevada has laws capping interest rates on loans at 40% for loans up to $500,000. Many merchant cash advances far exceed this rate.
- Nevada’s deceptive trade practices law prohibits misleading or deceptive conduct by lenders, which could apply to overly vague MCA terms.
- Nevada has laws regulating debt collection practices that may help defend against aggressive collections by MCA providers.
A merchant cash advance attorney will know how to leverage these protections for the Nevada business owner’s benefit.
Beware of Scams
Unfortunately, the merchant cash advance industry is also ripe with scams and predatory schemes. Many so-called lenders are not actually registered businesses. They lure in business owners with promises of fast money, then disappear with the upfront fees and leave the applicant with nothing. Warning signs of a Nevada MCA scam include:
- Requests for upfront fees before funding is provided
- Refusal to provide documentation or company information
- High-pressure sales tactics
- Too-good-to-be-true offers of approval
- Lack of transparency around rates, terms and costs
Reputable merchant cash advance providers should be transparent, registered Nevada businesses willing to fully explain their products. Having an attorney vet any agreement is the best way for a business owner to avoid scams.
-Alternatives to Consider First
Because of the high costs, it’s smart for Nevada business owners to consider alternatives before turning to a merchant cash advance. Some options include:
- Business loans or lines of credit from banks or credit unions
- Online small business loans that offer better rates and terms
- Asking investors for capital investment in the business
- Crowdfunding from customers or supporters
- Business cash advances that deduct a percentage of daily credit card sales
- 401k business financing loans against retirement savings
When to Contact a Nevada Merchant Cash Advance Attorney
If you do decide to move forward with a merchant cash advance, having an attorney review the agreement is highly recommended. They can help explain the terms, negotiate better rates, and add protective provisions.Here are some signs it’s definitely time to contact a Nevada MCA attorney:
- You are falling behind on payments and the provider is threatening lawsuits or asset seizures
- The provider changes payment amounts or terms in a way that seems unfair
- You suspect predatory lending practices or fee gouging
- You are considering a 2nd or 3rd merchant cash advance to pay off previous ones
Finding the Right Nevada MCA Attorney
It’s important to choose an attorney experienced with merchant cash advances in Nevada specifically. Here are some questions to ask during your search:
-- How many years have you handled Nevada MCA cases?
- Are you familiar with Nevada state laws regarding MCAs?
- What strategies have you used to successfully challenge predatory MCA companies in Nevada?
- Can you provide references from past Nevada MCA clients?
Look for lawyers that offer free consultations and case reviews. Make sure you understand their fees before retaining them.