Merchant Cash Advance Lawyer

There have been several new important and interesting cases that have come out in the last two years regarding MCA lenders and matters. Merchant Cash Advances are the notorious “purchase of future receivables,” that have harmed small and medium business all around the country. We receive more calls about Merchant Cash matters these days than any other type of debt. We have always believed these MCA’s to be extremely high interest loans from but courts in New York did not see it that way for quite a few years. That changed however when Federal judges in the Eastern District of New York in: Haymount Urgent Care PC v. GoFund Advance and Lateral Revovery LLC v. Queen Funding LLC, essentially held that MCAs should be treated as loans and that their interest rates equate to criminal usury in New York. This simply makes them unenforceable and unlawful debts. After these decisions, numerous decisions by New York State court judges followed holding that MCA’s are in fact loans that pretend not to be loans just to avoid the criminal usury law.

MCA lenders frequently use UCC liens to get around the need and expense of initiating litigation especially when they see a business is represented by attorneys that they know will defend and push to dismiss these matters. UCC liens can be attacked and stayed so that online funds are not frozen or are released to the creditor, but it is a tricky process. Reasons for attacking these UCC liens including the criminal usury element which makes the entire agreement voidable as well as a serious interference in business practice. These UCC liens are designed to incapacitate a small business by cutting off their ability to use online accounts such as PayPal, Intuit, Venmo, Square, Stripe and others without first winning a lawsuit and obtaining a judgment against the business. That judgment is what usually allows a creditor to levy a bank account which the MCA’s cannot do with just a UCC lien.

Other successful arguments against MCA lenders include showing that the Merchant Cash Advance lender lacks subject matter jurisdiction in the court that the matter is brought. In these matters, if the plaintiff such as: Kalamata Capital, Mantis Funding, Fox Capital Group, Wynwood Capital Group, Union Funding Source, Chrome Capital LLC, Ein Cap, Inc., Ace Funding Source, Unique Funding Solutions, Slate Advance, or others were formed under the laws of a state other than New York and the defendant is not in New York then there is no subject matter jurisdiction, and the case must be dismissed. The merchant may pursue the business in their home state but that brings with it new practical concerns such as retaining new counsel in that state and having to navigate the state’s laws as well as further costs and fees. Merchant Cash Advances can be defended against and won but it requires a attorney who is well acquainted with this extremely niche practice area.