Oregon Merchant Cash Advance Attorney
Merchant cash advances have become a popular form of alternative business financing in Oregon. Unlike traditional bank loans, merchant cash advances provide quick access to capital based on a percentage of future credit card sales. However, some Oregon business owners have found themselves struggling with the high repayment rates and aggressive collection tactics of merchant cash advance companies. If your business is having issues with a merchant cash advance in Oregon, contacting an experienced attorney can help protect your interests.
How Merchant Cash Advances Work
A merchant cash advance is a form of financing where a company purchases a portion of a business‘s future credit card receivables at a discount. For example, a merchant cash advance company may provide a business with $100,000 in capital in exchange for 15% of the business‘s credit card sales until $150,000 is repaid.The merchant cash advance company then collects a fixed percentage of the business‘s daily credit card receipts via automatic withdrawals from the merchant account. There is no fixed repayment schedule – the business simply repays the advance as credit card sales come in. This flexibility can be beneficial for businesses with irregular cash flow. However, it also means the total repayment amount can vary widely depending on sales volume.
-Common Legal Issues with Merchant Cash Advances
While merchant cash advances provide easy access to capital, they also come with some significant legal risks that Oregon business owners should be aware of:
- Excessively high interest rates – Some merchant cash advance companies charge interest rates over 100%, which may violate Oregon’s usury laws capping interest rates.
- Misleading marketing – Companies may misrepresent repayment terms, total costs, or eligibility requirements.
- Aggressive collection tactics – Businesses have complained of daily bank account withdrawal attempts that overdraw accounts, harassing phone calls, and threats of legal action.
- Lack of transparency – Statements often lack clear information about balances owed, payments made, fees charged, etc.
- Onerous contract terms – Some agreements contain provisions that restrict businesses’ rights.
- Personal liability – Owners may be personally responsible if the business defaults.
Oregon Laws Related to Merchant Cash Advances
Oregon has usury laws that limit the maximum interest rates lenders can charge. However, merchant cash advance companies have tried to avoid usury laws by structuring their products as purchases of future receivables rather than loans. This legal gray area has allowed some companies to charge exceedingly high effective interest rates.The Oregon Department of Consumer and Business Services has issued alerts warning businesses about the risks of merchant cash advances. However, oversight remains limited compared to regulations on consumer lending.
Working with a Merchant Cash Advance Attorney
If you are an Oregon business owner concerned about an existing merchant cash advance agreement, it is advisable to contact an attorney experienced with these types of financial products. An attorney can help you:
- Review your merchant cash advance contract and assess any provisions that may be unlawful or abusive.
- Calculate the true effective interest rate based on fees, payback amount, and term length.
- Negotiate with the merchant cash advance company for better repayment terms.
- Assert defenses if the company initiates aggressive collection efforts or legal action.
- Explore whether the advance violates state usury or consumer protection laws.
- Sue for damages if the company engaged in fraudulent, deceptive or predatory practices.
Finding a Qualified Merchant Cash Advance Attorney in Oregon
Here are some tips for finding a qualified merchant cash advance attorney in Oregon:
-- Search Oregon State Bar directories for attorneys experienced in financial services law, commercial litigation, and consumer protection.
- Look for lawyer review sites like Avvo to research attorneys’ backgrounds and experience with merchant cash advance cases.
- Ask other local business owners for referrals to attorneys they have worked with.
- Contact the Oregon State Bar Association for recommendations.
- Schedule consultations with a few attorneys to discuss your specific situation. Consider ones who offer free initial consultations.
- Verify the attorney is licensed in Oregon and has a clean disciplinary record.
- Choose an attorney you feel comfortable with and who understands your objectives.
Alternatives to Merchant Cash Advances
Before accepting a merchant cash advance, make sure to explore some alternative, lower-cost business financing options, such as:
- Bank loans – While traditional bank loans have stricter eligibility requirements, they typically have much lower interest rates and transparent repayment terms.
- SBA loans – The Small Business Administration offers various loan programs to assist small businesses.
- Business lines of credit – Lines of credit provide flexible access to capital like merchant cash advances but at lower costs.
- Invoice factoring – Factoring companies purchase unpaid customer invoices at a discount.
- Angel investors – Wealthy individuals sometimes provide capital to startups in exchange for equity.
- Crowdfunding – Platforms like Kickstarter allow you to raise funds from a large pool of small investors.