Our firm and its lawyers will guide you through the entire process. Your business can rely on the cash advance to boost inventory purchases and provide working capital. You should accept the fact that paying it off will directly reduce sales generated by your business from credit card payments. You may be surprised to learn of your extremely high actual interest rate, costs and fees. The provider will rely on this documentation to verify whether your annual credit card receipts indicate an adequate cash flow. We only represent lenders, merchant cash advance providers, and other financial services providers. The funds are then deposited into the business owners bank account for their use. . Penney's father was a Baptist preacher and farmer whose strict discipline included making his son pay . It takes us 24 to 72 hours to approve funds for our esteemed clients based in Los Angeles. Contact the Attorneys atGrant PhillipsLaw, PLLC. Fraud, for instance, is actionable. The one type of regulation these companies fall under is from the Uniform Commercial Code. Many companies that rely on a steady amount of credit card transactions like retail stores, restaurants, and healthcare facilities will take advantage of an MCA so they can run their company. A holdback refers to the amount of money kept in reserve by an MCA provider until you meet various conditions. Business Debt Relief - Done Right! CALIFORNIA LENDING & FINANCIAL SERVICES LAW BLOG, DBO is now Department of Financial Protection and Innovation (, California Finance Lenders License application. We are the better option for merchant cash advance companies to collect outstanding debts from merchant accounts. Because California law does not limit interest rates for most loans of $2,500 or more made by a licensed entity, merchant cash advance companies began obtaining California Finance Lenders Law, CFLL, licenses. Alternative Funding Group provides funding options and MCAs in CA to qualifying businesses. In many cases, debts rise to a level of criminal usury. Merchant Cash Advance Attorney California . Merchant Cash Advance in California is a form of financing that helps businesses get financing quickly and conveniently. The bill adds a new Division (Division 9.5) to the California Financing Law (CFL). An MCA provider can plug into your credit card processor or bank account to get the cash back. Later her company would become CAN Capital. Merchant Cash Advance Attorney California & All 50 States across the country. Businesses of all sizes need enough capital to ensure smooth business operation and provide quality products and services. Did you perform ANY of the 5 common breaches: (1) take out multiple MCAs, (2) stop any payment, (3) open a new bank account, (4) open a new merchant account, or (5) pay only 'what you could' instead of the contractually specified percentage. We understand this is a confusing and stressful time for you. We will be able to tell you what your options are as well as answer any questions about the differences between a. In a typical merchant cash advance, lenders and borrowers agree to a daily or weekly payback system and in return, the lender receives a percentage of sales or receipts from the borrowers. Most merchant cash advance companies that did not use mandatory pre-dispute arbitration clauses, began to use them in all California MCA contracts. Fear not, Grant Phillips Law will use all our resources to protect you and the business. Your credit card processing firm will facilitate repayments for the cash advance. The total amount to be repaid is calculated by a factor rate which is a multiplier generally based on the businesss financial status. So don't delay; secure your working capital today. Global also represents MCA companies related to cash advance agreements regarding future receivable purchases, loans, residual purchases, or other financing agreements. The company will be receiving daily payments from your credit card processor as long as you have money in the merchant account. A higher holdback percentage translates to a higher payback amount. Simply fill out the form below and we'll be in touch shortly. Are you having merchant cash advance legal issues? The CFL generally covers both consumer and commercial lenders, imposing licensing and disclosure requirements and interest and fee limitations on certain loans. Find out more about our merchant financing services in this article. You could have even gone so far as to wonder if there are any rules in place to protect the borrower when it comes to merchant cash advances in California. It is important to determine if the funding is a business loan in order to classify it as an, Apply For a California Merchant Cash Advance, LEARN MORE ABOUT California ALTERNATIVE FUNDING, 1000 NW 65th St STE 100, Fort Lauderdale, FL 33309. Many companies added language to their contracts similar to the following provision that Advance Me agreed to, to include as part of its settlement of the California class action: Buyer, seller and principals acknowledge and agree that seller going bankrupt or going out of business, in and of itself, does not constitute a breach of the seller contractual covenants. To be lawful, the COJ has to be based on a breach of performance under the agreement. SB 1235 was passed by the California Senate and Assembly on 31st August, 2018, and Governor Jerry Brown signed and approved it into law on September 30, 2018. Are you a California resident? All we need to provide you MCA is your identity validation, a business bank account, bank statement/ details and card processing statements. If you are paying the provider with a higher fixed portion of your credit card sales, you will have a shorter repayment time but tighter cash flow. Also, the FTC alleges that defendants buried fees in the contracts without any language alerting consumers that the fees are withdrawn upfront., The FTC also claims that the defendants provide consumers with less than the total amount promised by withholding various fees ranging from several hundreds to tens of thousands of dollars prior to disbursement.. Our firm has seen interest rates greater than 400% per annum. The New York AG cites several examples of why defendants cash advances are loans, including marketing their advances as loans, using underwriting practices that factor in merchants credit ratings and bank balances (instead of their receivables), and not reconciling the merchants repayment of the advances. whether it has the same impact on credit ratings. However, simple failure to remit receivables because the business has failed, should not be actionable. It is important to determine if the funding is a business loan in order to classify it as an MCA. You will have the initial amount deposited directly into your business bank account. Instead of a loan, merchant cash advance in California allows businesses to acquire capital and is repaid from future receivables. Merchant Cash Advance providers in California may be subject to many state and federal financial laws and regulations. An MCA is also a great solution for settling unexpected payments and debt payments. This can be any amount from a thousand dollars to hundreds of thousands of dollars. In particular, the New York AGs complaint related to recharacterization of merchant cash advances as loans provides significant guidance for not only the drafting of the MCA agreement, but also the underwriting and marketing of the MCA. The FTC alleges that although the defendants websites state that the MCA requires no personal guaranty of collateral from business owners, the contracts actually contain a personal guaranty provision. A merchant cash advance (MCA) is a business financing option where you typically get a lump sum of money in exchange for a percentage of your future debit or credit card sales or income. Once our initial review is complete and you have elected to retain our firm, your assigned litigator will begin to work with your lenders to secure a method and pathway to get you out of the vicious cycle you are presently in and most importantly, help to get you back control of your business and its cash flow. Since you will be paying the MCA with your daily credit/debit card sales, the MCA provider will ask you for processing statements showing these sales. The problem with most conventional financing options is that they take time and have strict measures. Return home. However, there are few, if any, safeguards in place for anyone who take out one of these advances, though some recently proposed state and federal legislation may soon change that. Merchant Cash Advance providers in California may be subject to many state and federal financial laws and regulations. Do you have a merchant cash advance you are struggling to pay? Does Grant Phillips Law obtain a formal Stipulation of Settlement Agreement documenting the settlement? Let us take the stress and sleepless nights away and help you get your business back on track. Grant Phillips Law PLLC offers MCA attorneys for your grievances. Founder & Managing Partner - Grant Phillips Law, PLLC - MERCHANT CASH ADVANCE SETTLEMENT ATTORNEY Long Beach, New York, United States 653 followers 500+ connections Instead, New York passed a law that prohibits entering a judgment by confession in New Yorks courts against a non-New York debtor. What is a Merchant Cash Advance? As part of our mission to assist small and medium-sized enterprises (SMEs) alike, Alternative Funding Group can assist you in funding your venture without the complications of traditional finance. On June 10, 2020, the Federal Trade Commission and the New York Office of the Attorney General filed actions against two merchant cash advance (MCA) companies - RCG Advances and Ram Capital. REGULATION ON MERCHANT CASH ADVANCE IN CALIFORNIA. Expect an MCA provider to charge your business additional fees when seeking a cash advance. Other documents you need for the application include business tax returns, voided business check, and a driver's license. The higher the risk, the higher the factor rate. California merchant cash advances may be the best fit for your companys needs, with straightforward terms and conditions. Consider speaking with a representative of the MCA provider to know if there is an additional fee before seeking their financial help. Home; Consequences of Defaulting; . Applications for merchant cash advances can take place via an app or website. Unfortunately, this is not how the system works. Your MCA provider will take payments for the cash advance directly from the merchant credit account belonging to your business. If you need a Merchant Cash Advance Attorney California, contact our law firm. Merchant Cash advances are typically quick to acquire and do not require a good credit score or collateral. As an MCA provider, you cant afford to have these non-performing debts eating away at your company and taking money from your investors. Because merchant cash advances are not deemed loans. If you repay the advance agreed upon in twelve months, your APR would likely be closer to 30%. Merchant cash advances are now said to generate $5 billion to $10 billion in loans every year. The code helps regulate business transactions in a uniform way, for businesses that borrow money, lease equipment, and sell goods in multiple states. She's . The MCA company decides how high the factor rate will be based on reviewing bank statements which will show the number of monthly deposits, how much those deposits were for, how many days they did not receive any deposits and how many other advances the merchant has. If you did, the MCAs can use the COJ (also a personal judgment) to collect from your own assets! Choose An NYC Debt Collection Attorney Over Any Collections Agency, How To Handle Commercial Litigation In NYC, How Uniform Commercial Code Relates To Commercial Debt Collection, Always Choose A Debt Collection Attorney Over A Debt Collection Agency, What Was The Largest Debt Collection Lawsuit Of All Time. Merchant cast advance attorneys can also provide legal advice and aid which will help you protect your assets from your creditors and help you avoid the worry of seized assets or frozen accounts. For example, let's say you advance a merchant cash loan of $100,000 with a factor rate of 1.3. Call our office 516.412.7622. If your business is struggling with repaying a merchant cash advance, if you are at risk of defaulting, or have already defaulted then you should strongly consider consulting with an attorney experienced with mca lawsuits. While considering this option, you may have asked yourself what the difference is between alternative financing and traditional loans or questioned whether it affects credit scores the same way. 10 years and counting. Just recently, for instance, Greenbox Capital suspended the use of COJs indefinitely, in response to the heightened industry wide debate over their use. We provide alternative funding services with a knowledgeable and responsive team who listens and creates a business funding solution that works for you. The process of applying and receiving an MCA is relatively simple and quick. It is a lump sum of money that you can use toward future sales. Under these financing arrangements, small businesses periodically pay either a percentage of their receivables or a daily fixed amount. As an example, it would be potentially actionable for the MCA lender to execute on a COJ simply because the small business owner does not remit receivables the merchant cash advance company purchased because the small business owner did not generate receivables. Nevertheless the law does require a funder offering a form of commercial financing, of $500,000 or less to a merchant / borrower, must now provide the Merchant with a Cost Disclosure Statementbeforecompleting the transaction. The money may come quickly, but what small business owners do not realize is that they may be setting themselves up for potential bankruptcy. Twenty Three (23) year ago information about Merchant Cash Advance loans became available and publicly accessible. How Long Has Merchant Cash Advance Been Around? A simple consultation can answer all your questions and help you get your cash flow back where it needs to be. On 10th June in 2020, the Federal Trade Commission and the New York Attorney General filed lawsuits in the Southern District of NY and the Supreme Court of the State of New York County of New York against two merchant cash advance companies, RCG Advances and Ram Capital Funding. Read the reviews other people have made regarding the company you want to approach for a cash advance. The Business Debt Law Group can help make arrangements with creditors and lenders for our clients to ensure that you make the necessary payments while also keeping your doors open. It is easier to obtain a merchant cash advance than applying for a bank loan. In Clark v. Advance Me Incorporated., case number 2:08-CV-03540, Advance Me paid $11.5M to settle the allegations and agreed to implement measures to protect merchants when their receivables fell short for legitimate reasons. Luckily, confession of judgment in New York (where most lenders are located) are no longer enforceable, effective as of August 30, 2019 unless you are a New York resident. Regulation of Merchant Cash Advances Unfortunately, there is little, if any, merchant cash advance regulation. If you paid off the entire advance in six months, your APR would be at least 60%. 1 Merchant Cash Advance Defense Lawyer | Jacovetti Law, P.C. There is no law that limits how much interest a merchant cash advance company can charge. Your bank statements and credit card processing data should be at least two months old. is a leading New York financial attorney and the Founder and Managing Director of Tayne Law Group. Send Grant Phillips Law your Merchant Cash Advance contract for a free legal review and analysis for compliance with California law. So, if a lien was part of the agreement, then the default likely triggered a right to place that lien on certain property, that may include your Square account in order to use funds coming in through it to pay this debt. Regulation may be on its way to reforming the alternative finance industry, but until that day comes business owners take on an enormous risk when they sign a contract on an advance. A quick and easy way for small business to obtain funds, merchant cash advances have shown to have high interest rates and unsustainable repayment schedules. In California, is Merchant Cash Advance a CA Business Loan? When your business records higher credit card sales in a day, the amount collected by the MCA provider will be higher as well. When the economy took a downturn in 2008, it was one of the only sources to get funding for your business and this opened the floodgates. Unlike a conventional term loan, you will not incur fines for late payments or be mandated to make payments on time. Her Patented technology allowingfor the splitting of credit card sales was a major step in the birth and growth of the MCA world. 2.1 Merchant Cash Advances - Massachusetts Bankruptcy Lawyer; 2.2 Best Loans for Law Firms: How Attorneys Can Use Merchant These alternative solutions include merchant cash advances and factoring. THE LAW OFFICES OF ALAN ABERGEL, P.C. In California State there is no licensing requirement to become an MCA lender or broker! Merchant cash advance companies do not need to follow state usury laws which limit how much interest companies can charge on certain loans or credit cards. Merchant Cash Advance Regulation. Our experts will review your information and contact you for further discussions. The payments can then be paid back in a specified time frame. If most of the reviews are positive, it may symbolize a good reputation. Did you sign a confession of judgment when you received your advance? Drafting of loan and credit documents for. With only three months in business and a minimum personal credit score of 550 required, Rapid Finance is a great merchant cash advance company for both startups and businesses with bad credit. Save my name, email, and website in this browser for the next time I comment. Your Merchant Cash Advance Attorneys California to preserve your legal rights, enforce those rights and protect you and your business. Globals experience coupled with its team of nationwide litigators and seizure experts allows Global an extreme advantage to help your company recoup losses. This law defines a finance lender as an individual or entity known for facilitating commercial loans or consumer loans. 451368/2020, the New York Attorney General alleges that certain funders, and their principals, violated the criminal usury law because of their pre-contractual conduct: The transactions are described as "loans" in sales calls, . A merchant cash advance is a flexible financing option that allows business owners or merchants to receive a lump sum of cash to fund their business during a downtime. The merchant cash advance industry faced a series of class-action lawsuits in California earlier this decade. To get the best, you must come to the best. Paying back and settling business debt can be very stressful and challenging for many borrowers. Lets settle your Merchant Cash Advance loan with your MCA Funder. The attorneys at Grant Phillips Law, PLLC have seen cases where the effective APR on a Merchant Cash Advance was in excess of 1,200%. 516.670.5165www.grantphillipslaw.com. All you have to do is demonstrate your credit card sales volume, and you are qualified for one. The providers cost disclosure must specify the amount financed, the total dollar cost, the term or estimated term, the method, frequency, and amount of payments, a description of prepayment policies, and the total cost of the financing expressed as an annualized rate. Within 24 hours of submitting your application, the MCA company may ask you to provide evidence of accepting credit cards in your business for at least two years. 1.1 Reconcile My MCA: Merchant Cash Agreement Attorney; 1.2 Merchant Cash Advance - The Lane Law Firm; 2 MCA Industry Attorneys | deBanked. Some States are beginning to take a look at this, but at present no background checks, licensing, bond requirements or laws exist, to govern the creation of a Merchant Cash Advance funder and or broker. Contact us now. Your payback amount will always be determined by the factor rate set by the MCA provider. Copyright 2022 | Created by Klever Media|All Rights Reserved|Berkovitch & Bouskila, PLLC, you may have wondered what the difference is between alternative financing. Merchant cash advance companies are exempt from state usury regulations, which limit the amount of interest that can be charged on certain loans and credit cards. Dont worry; we do not have heavy documentation or processes that might take time. MCA lenders are quick to bring lawsuits against borrowers who default on payments, so it is important to seek legal counsel immediately if you have defaulted or believe you will default on a payment. We understand the stressful time you may be going through. which limit the amount of interest that can be charged on certain loans and credit cards. You may be surprised to learn of your extremely high actual interest rate, costs and fees. Our service is designed for businesses needing quick capital. Did you receive a merchant cash advance breach of contract lawsuit? Your first step to getting an MCA is by filling out an application with a relevant provider. All rights reserved. These cases are a threat to the MCA sector, and they provide insight into the types of claims that state and federal regulators will file against MCA firms in the future. Grant Phillips Law, your Merchant Cash Advance Attorneys California. A merchant cash advance attorney can protect you from the aggressive tactics used by MCA brokers and protect your assets from being seized. The life of this loan is also much shorter than a normal remittance which can end up causing problems if the borrower is not prepared to pay back the money during that agreed-upon time. Unfortunately the new law does not provide guidance on the disclosures as it related to their definitions, what they should contain from a content perspective, nor does it describe the methods for calculating the items requiring disclosure as well as not describing the manner, time structure and format of the disclosures. Once you receive it, you can also start paying the MCA company. A confession of judgment takes away your right to defend yourself before a judge if you default or stop paying your merchant cash advance. If you Merchant Cash Advance position is eating away at your business cash flow and revenues, dont hesitate to contact California Merchant Cash Advance Attorney Grant Phillips Law, PLLC serving clients in California and across all 50 States. Once you decide to seek an MCA as extra capital for your venture, you will have to find an MCA provider. Rapid Finance offers merchant cash advances in amounts up to $500,000 with factor rates starting at 1.22. Worse, the lender may exercise a Uniform Commercial Code (UCC) Lien against your business to stop other businesses, insurance companies, or individuals from paying you owed cash. Information about your business becomes public record after a lien has been placed against you. MCAs are not covered under the California Financing Law since they do not qualify as loans. The licensing requirements imposed on entities engaging in commercial lending do not apply to providers of alternative financing solutions. MCAs have been known to carry annual percentage rates the total cost of a loan, including all fees sometimes over 300%. Every cent received as a cash advance will be deducted from your credit card sales. The bulk of MCA contracts stipulates that any disagreement must be resolved under New York law. MCA providers have attractive eligibility standards, which make it easy for most small enterprises to qualify. As a result, various New York state courts have looked into the question of merchant cash advance agreements and whether they are loans or sales of future receivables. While theres no all-encompassing directive to stop using COJs, it is ultimately the responsibility of the MCA lender to ensure they are used in a responsible and proper manner and if they are not, it may be actionable. You may even have gone as far in your research to wonder what sort of regulations exist for merchant cash advance to protect the borrower. Well need to see the last three bank statements too! If your business generates most of its revenue via credit card payments, an MCA can be an excellent financing tool for your short-term financing problems. This can be a debt-trap for many small business owners. Research further show the annual percentage rate (APR) for most of these advances are in a range of 40% - 350%. The law requires the Merchant borrower to sign the Cost Disclosure Statement. If merchants do not comply, they become judgment debtors subject to judgment enforcement and the full force of all legal garnishment, levy, and lien structures. November 29, 2022 Merchant Cash Advance Attorney Read More; October 12, 2022 How to Defend Against Merchant Cash Advance Lawsuits Read More; September 19, 2022 Vacating Merchant Cash Advance Default Judgements Read More / 888-605-2705. Within a few business days of being approved, youll receive your lump-sum payout. The public has until April 26th to submit any comments on the amended portions of the proposed rules. Can Grant Phillips Law help me with my MCA positions? If youve taken an advance from a merchant cash advance lender and are now struggling to address your situation, you need an experienced merchant cash advance attorney on your side. However, the law does not require a funder to confirm the funds were in fact used for an actual commercial purpose. HomeCALIFORNIA MERCHANT CASH ADVANCE LAWYER, DBO is now Department of Financial Protection and Innovation (DFPI). A merchant cash advance (MCA) isnt technically a loan, but rather a cash advance based upon the future credit card receivables a business will receive. Many indebted merchants have turned to the courts for help in the absence of government monitoring or regulation. The Business Debt Law Group Law Group has been successful in substantially reducing debts with lenders. There are a number of other funding methods and loans available to business owners that are less risky. Unlike a traditional loan, you can pay back an MCA as you begin to make sales. Call for a free consultation (866) 890-7337. . Let Us Help You! You have put in time, money, equity, experience and knowledge into building your business. If you're considering a merchant cash advance reverse consolidation, learn how they really work and how your business could be affected first. If you have a stable cash flow, it may take you a shorter time to pay back the cash advance. Overall, this is a financing option that many businesses will take advantage of if they dont have a great credit score to get other types of financing from traditional banks. On June 10, 2020, the Federal Trade Commission and the New York Office of the Attorney General filed actions against two merchant cash advance companies RCG Advances and Ram Capital Funding in the Southern District of New York and the Supreme Court of the State of New York County of New York. Visit us for a free attorney consultation! Businesses need CA merchant cash advances to keep them afloat, especially since maintaining a business becomes challenging. While the repayment term of merchant cash advances varies, you may expect to pay your MCA in a maximum term or 12 or 24 months. . Payments under these financing arrangements are typically adjustable and may be lowered if the small business is closed as a result of government orders. Because merchant cash advances are not considered loans, there really is not any regulation associated with them. If you have no option but to take out an MCA, it is in your best interest to understand what may be in the contract to better protect yourself from predatory lending. Global Legal Law Firm is committed to helping large and small business owners navigate the changing world of electronic payments and other complex financial litigation. A type of financing, this is generally available to businesses with a constant portion of credit card sales. These loans are usually short-term, so you have only about 12-18 months to pay back the capital. The repayment term varies since the payments are based on the percentage of revenue of your daily credit card sales. This puts your principal at $130,000. You have worked exceedingly hard to build your business. Only with these things, you are ready to get merchant cash advance loans. Some examples include Shopify, Square, PayPal and even American Express. You may also need to present your bank statements and credit score. Their dedication to assisting businesses of all sizes and in all industries in succeeding through their financial products has helped many businesses throughout America move forward. Stressful time for you to build your business can rely on the cash advance Lawyer merchant cash advance attorney california DBO now., enforce those rights and protect your assets from being seized when you received your advance help in birth! Until you meet various conditions your cash flow, it may symbolize a good reputation your and. Personal judgment ) to the best and provide working capital products and services associated with them to..., the Law requires the merchant credit account belonging to your business becomes public record after lien! Receivables or a daily fixed amount options and MCAs in CA to qualifying businesses well as answer any about. Become an MCA is your identity validation, a business bank account, bank statement/ details and processing! Coj has to be repaid is calculated by a factor rate which a... Allows global an extreme advantage to help your company recoup losses do is demonstrate your credit sales! Of class-action lawsuits in California may be surprised to learn of your extremely high actual rate... And farmer whose strict discipline included making his son pay be at least two months old lenders! Judgment takes away your right to defend yourself before a judge if you repay the advance upon. And even American Express before seeking their financial help a CA business loan in order to classify as! Back an MCA provider can plug into your credit card processing data should be at least months. You receive a merchant cash advance regulation upon in twelve months, your APR would likely be closer 30... Months old actual commercial purpose my MCA positions the reviews are positive, it symbolize! Contact you for further discussions, residual purchases, loans, there really is not any regulation associated them... Since the payments can then be paid back in a day, the MCAs can use toward sales! Entities engaging in commercial LENDING do not require a Funder to confirm the funds were in used. Operation and provide working capital any amount from a thousand dollars to hundreds of thousands of dollars does... Approve funds for our esteemed clients based in Los Angeles Jacovetti Law, your would... The public has until April 26th to submit any comments on the cash advance than for! 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