Oakland Merchant Cash Advance Legal Help
Merchant cash advances can provide quick funding for small businesses, but they also come with risks. If you’re an Oakland business owner who has run into legal issues with a merchant cash advance, you may need legal help to resolve the situation. This article provides an overview of merchant cash advances, common legal issues that arise, and how an attorney can assist.
What is a Merchant Cash Advance?
A merchant cash advance (MCA) is a form of business financing where a company provides a lump sum payment to a business in exchange for a percentage of future credit card and/or debit card sales over a set period of time. It is not technically a loan, but rather the purchase of future receivables at a discount.MCAs are easy to qualify for as they are based more on credit card sales volume than personal or business credit scores. The application process is quick and funding can be received in as little as a few days. This speed and accessibility is the main appeal for many small business owners.However, MCAs also come with very high repayment costs that are often obscured by complex legal agreements. Business owners can easily get in over their heads without fully understanding the terms.
Common Legal Issues with Merchant Cash Advances
Some of the most common legal issues that arise with merchant cash advances include:
Excessively High Repayment Costs
While MCAs provide easy access to funding, the downside is they often come with an annualized cost of 100-200% APR or more. These high repayment costs quickly eat into business profits.
Breach of Contract
The MCA agreement terms are usually very one-sided in favor of the funder. Any minor issue like a late payment can trigger steep default fees and penalties. MCA companies may also use overly aggressive collection tactics that violate consumer protection laws.
Misleading Statements and Omissions
MCA providers have a duty to fully disclose all costs, terms, and conditions to the business owner before signing. Yet key details are often obscured or misrepresented. This can make the agreement void or voidable.
Unfair or Deceptive Practices
Some MCA funders engage in unlawful conduct such as improperly accessing business bank accounts, making unauthorized debits, or charging unlawful fees outside of the agreement terms.
How an Attorney Can Help
If you are an Oakland business owner facing legal issues with a merchant cash advance, contacting an experienced attorney is highly recommended. Here are some of the ways we can help:
Review the MCA Agreement
We will carefully review your merchant cash advance agreement and all related documents to identify any unlawful, deceptive or unfair terms and practices. This review also uncovers costs that may have been obscured.
Send Demand Letters
If we find violations in the MCA agreement or the lender’s conduct, we can send a demand letter asking for policy changes or settlement. The right letter from a law firm often compels action without needing to go to court.
File Complaints
Based on our findings, we may recommend submitting complaints to government regulators regarding deceptive advertising, failure to properly disclose costs, unlawful debt collection practices, or other violations committed by the MCA company.
Defend Against Lawsuits
If the MCA provider tries to sue your business for breach of contract, we can build strong legal defenses around flaws in the agreement itself or improper conduct by the funder.
Negotiate Settlements
We can negotiate with the MCA company on your behalf to reach a reasonable settlement that relieves you of excessive costs and fees they imposed.
Explore Other Options
If negotiating fails and litigation seems unavoidable, we explore alternatives like debt consolidation or restructuring, bankruptcy protection, or selling the business assets.The specific approach depends on the unique circumstances of your situation. The key is acting quickly to limit further business losses.
Protect Your Business with Legal Help
As you can see, merchant cash advances come with considerable legal risks. But Oakland business owners have rights and protections under state and federal law.If you believe an MCA provider misled you or engaged in unlawful conduct, contact our office today to schedule a free case review. An attorney can help you understand all your options and fight to protect your business. Don’t delay – the sooner you act, the more we may be able to save.
