Oklahoma Merchant Cash Advance Attorney – A Helpful Guide for Small Businesses
Merchant cash advances (MCAs) have become an increasingly popular form of alternative business financing in Oklahoma. While MCAs provide quick access to capital, they also come with some major drawbacks that business owners should be aware of. This article will provide an overview of MCAs in Oklahoma, discuss the pros and cons of these financing arrangements, and explain why it’s important to work with an experienced MCA attorney when considering or dealing with an MCA.
Overview of Merchant Cash Advances in Oklahoma
Oklahoma has a vibrant small business community, with over 96% of employers in the state classified as small businesses. Many small business owners turn to MCAs as a financing option because they may not qualify for traditional bank loans.Here’s how an MCA works:
-- A business receives an upfront lump sum payment, usually between $5,000 – $500,000.
- In exchange, the business agrees to pay back a fixed percentage of their future credit card sales to the MCA company until the balance is repaid.
- Repayments are taken automatically as a percentage of daily credit card receipts.
MCAs are easy to qualify for compared to small business loans. However, they come at a high cost, with MCA companies typically charging the equivalent of 60-200% APR when all fees are calculated. The combination of easy capital access and lack of regulation has led to a proliferation of MCA companies operating in Oklahoma. As complaints of predatory lending practices have risen, both state and federal regulators have started to take notice.
Pros and Cons of Merchant Cash Advances
Below is an overview of the main advantages and disadvantages of merchant cash advances:
Pros
- Quick access to capital – MCA companies can fund businesses in as little as 24-48 hours. This appeals to those with immediate capital needs.
- Flexible qualifications – Approval is based primarily on credit card sales history. Newer businesses and those with lower revenues or credit scores may qualify.
- Simple application – The application process is much faster and easier compared to small business loan applications.
Cons
- High rates and fees – MCAs are expensive, with total repayment costs between 1.5 – 2.5 times the original advance amount.
- Daily repayments – Repayments are taken from daily credit card receipts. This can be a burden during seasonal slow periods.
- Risk of debt spirals – If revenues drop, the fixed daily repayment amounts can lead businesses into a debt spiral.
- Confusing contract terms – MCA contracts often lack transparency and may include hidden fees.
Why Work with an Oklahoma MCA Attorney
With an understanding of how MCAs work, it becomes clear why legal guidance is critical if considering an MCA. An experienced Oklahoma MCA attorney can assist in the following ways:
- Review the MCA contract – They will scrutinize the agreement to identify any prohibited or confusing terms.
- Explain legal options – If any violations are found, they will advise you of your rights and options under Oklahoma laws.
- Negotiate better terms – An attorney can negotiate with the MCA provider to improve contract terms that are unfavorable.
- Assist with disputes – They can help settle disputes with MCA companies over repayment issues or collections.
- Defend against lawsuits – If legal action is taken against your business over the MCA, an attorney can build a defense.
- Explore debt relief – They will examine all debt relief options if the MCA becomes unaffordable, including settlement or bankruptcy.
Having experienced legal counsel levels the playing field when dealing with MCA companies and protects your business interests.
-Oklahoma MCA Laws and Regulations
While Oklahoma has not passed comprehensive MCA legislation yet, there are some relevant laws and regulations:
- State lending laws – MCAs may fall under state lending and finance laws regarding allowable interest rates and fees. Violations may invalidate the agreement.
- Deceptive trade practices – Oklahoma’s Consumer Protection Act prohibits deceptive marketing, sales tactics, or contract terms by MCA companies.
- Recent federal scrutiny – Federal regulators like the Consumer Financial Protection Bureau have warned about MCA abuses. Stricter nationwide rules may be coming.
- Potential usury violations – If rates and fees are deemed exploitative, usury challenges can argue the MCA agreement is unlawful.
For now, Oklahoma MCA companies operate in a largely unregulated environment. Having an attorney review any MCA agreement is critical to ensure your rights are protected.
Finding the Right Oklahoma MCA Attorney
It’s important to choose an attorney with specific experience in merchant cash advance cases. Here are some questions to ask during your search:
- How many years have you handled MCA cases in Oklahoma?
- Are you familiar with Oklahoma laws as they pertain to MCAs?
- What strategies have you successfully used to challenge MCA companies?
- Can you provide references from past Oklahoma MCA clients?
- Will you review my agreement for potential violations at no cost?
Look for lawyers that offer free consultations and case reviews. Be sure you understand their fees before retaining them.
Common MCA Violations in Oklahoma
When reviewing your MCA agreement, here are some potential violations your attorney will look for:
-- Rates and fees exceeding Oklahoma’s limits – MCA rates often violate state lending laws.
- Unreasonable repayment terms – Daily repayment amounts that exceed a reasonable percentage of sales may be unlawful.
- Unauthorized debiting – Taking repayments without proper merchant authorization is illegal.
- Confessions of judgement – These clauses waive your legal rights and are prohibited in Oklahoma.
- Personal guarantees – Requiring a personal guarantee may violate Oklahoma lending laws.
- Deceptive language – Using terminology like “purchase agreement” instead of loan agreement is deceptive.
If prohibited terms are found, your attorney can argue the agreement is invalid and unenforceable. This may allow the MCA balance to be discharged.
Negotiation Strategies in Oklahoma
Before pursuing legal action, your attorney will first try to negotiate a settlement with the MCA company. Here are some effective negotiation tactics:
- Offer a lump sum settlement – Propose paying a smaller lump sum amount to satisfy the debt.
- Request reduced payments – Ask for lower daily repayment amounts based on current sales data.
- Convert to fixed payments – Seek to convert the MCA to fixed weekly or monthly payments.
- Threaten legal action – Remind them of potential contract violations and your willingness to sue.
- File complaints – Submit complaints to state regulators regarding deceptive practices.
Having an attorney involved shows the MCA provider you are serious about defending your rights under Oklahoma law. Many will negotiate a settlement rather than risk litigation.
-Oklahoma MCA Defenses
If a settlement cannot be reached, your attorney can build a strong defense against any lawsuit filed. Possible defenses include:
- Usury violations – Argue the rates and fees are exploitative and unlawful under state lending laws.
- Unconscionability – Challenge contract provisions that unreasonably favor the MCA company over your interests.
- Deceptive trade practices – Allege violations of Oklahoma’s Consumer Protection Act regarding deceptive marketing, sales tactics or contract terms.
- Breach of contract – Argue the MCA company breached the agreement in some manner, releasing your obligations.
- Unjust enrichment – Contend the MCA company stands to unfairly profit given the circumstances.
Your lawyer will craft the strongest defense by identifying violations of Oklahoma laws within your MCA agreement. Their goal is to have the lawsuit dismissed and the agreement invalidated.
Should You File Bankruptcy?
If you owe multiple MCAs or other debts you cannot pay, bankruptcy may be an option. Filing Chapter 7 or Chapter 13 bankruptcy can discharge part or all of your merchant cash advance debt. Your attorney will advise if bankruptcy makes sense based on your assets, debts, and income sources.Bankruptcy provides a “fresh start” by eliminating qualifying debts. However, it comes with long-term consequences that your lawyer can explain.
Act Fast to Protect Your Rights
If you received a merchant cash advance in Oklahoma and are struggling with payments, take prompt legal action. An experienced MCA attorney can review your agreement for violations, negotiate better terms, and build defenses if needed.Do not wait until you are facing collections or lawsuits to seek help. By acting early, you maximize your leverage against unscrupulous MCA companies. With the right legal guidance, you can resolve your MCA debt and move forward.