Additionally, your company needs minimal revenue of $90,000 annually or $7,500 for the last three months. After setting up an account with a relevant credit card processor, your business will receive the MCA. It is a lump sum of money that you can use toward future sales. Skip to content. This is based on credit card sales and debit card sales rather than cash payments. Interest rates are designed to accrue over time while factor rates are not affected by the time taken to repay a merchant cash advance. Thus, it has been a popular choice for business owners seeking to assist or expand their businesses. The one type of regulation these companies fall under is from the Uniform Commercial Code. Save my name, email, and website in this browser for the next time I comment. The repayment term varies since the payments are based on the percentage of revenue of your daily credit card sales. We have saved our clients millions of dollars. Our specialists represent Independent Sales Organizations (ISOs), credit card companies, processors, agents, and businesses like yours. Though it may be time-consuming to make the changes, setting up the account is a prerequisite for accepting a cash advance. Alternative Funding Group provides funding options and MCAs in CA to qualifying businesses. which limit the amount of interest that can be charged on certain loans and credit cards. Global also represents MCA companies related to cash advance agreements regarding future receivable purchases, loans, residual purchases, or other financing agreements. Though MCA providers do not require a CFL license, they are mandated by the California Disclosure Law to make detailed and specific disclosures about their products. Sorry, the comment form is closed at this time. Do you have a merchant cash advance you are struggling to pay? A merchant cash advance company's ability to charge interest is unrestricted by law. Your main goal as a borrower is to avoid filing for bankruptcy and closing your business. Yes, and defaulting on Merchant Cash Advance Loans can be especially detrimental to a business and could result in lawsuits, judgments and liens from the lender as well as negative credit reporting. Along with similar claims and allegations advanced by the FTC, the New York AG contends that defendants disguise each loan as a Purchase and Sale of Future Receivables, but in reality, the transactions are loans.. What is a reconciliation? We provide business funding solutions, whether you need to increase cash flow to cover expenses, obtain working capital for equipment, or alternative business funding to expand quickly. MCA providers base their reputation on the type of reviews and feedback they receive. In time, many feel that the CFL will require Merchant Cash Advance funders to be licensed. Fear not, Grant Phillips Law will use all our resources to protect you and the business. 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. We do not represent consumers. California commercial financing disclosures. Grant Phillips Law has a dynamic team of lawyers with the necessary knowledge, experience and expertise to help you get out from burdening Merchant Cash Advance positions. MCA providers consider your credit card processing statements and bank statements for your business to determine a factor rate for your MCA. Consequently, the subject of merchant cash advance agreements and whether they constitute loans or sales of future receivables has been considered by several New York state courts. The addition of brokers does not make this distinction any easier. It consists of lump-sum payments and is repaid through the businesss future revenue. Call for a free consultation (866) 890-7337. . 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. On September 30, 2018, Governor Brown signed it into law. The provider expects a portion of sales generated from credit/debit card payments in return. 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. 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. Merchant cash advance companies look at the daily credit card receipts to determine if the business is capable of paying back the funds in a timely manner. Alternative Funding Group reviews CA Merchant Cash Advance applications and are subject to approval within 24 to 48 hours depending on the business details, cash advance amount, and other information from the application form. Initially merchant cash advances were byproducts to selling credit card processing point of sale systems. The money may come quickly, but what small business owners do not realize is that they may be setting themselves up for potential bankruptcy. In California, is Merchant Cash Advance a CA Business Loan? Our firm has seen interest rates greater than 400% per annum. They do not fall under any state usury laws. Your MCA provider will take payments for the cash advance directly from the merchant credit account belonging to your business. You must have a solid Internet connection for you to submit the required information. 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. For answers to these questions and any other you may have, dont hesitate to contact the Merchant Cash Advance California attorneys at Grant Phillips Law, PLLC. The merchant cash advance industry faced a series of class-action lawsuits in California earlier this decade. The addition of brokers does not make this distinction any easier. Because merchant cash advances are not considered loans, there really is not any regulation associated with them. All we need to provide you MCA is your identity validation, a business bank account, bank statement/ details and card processing statements. It takes us 24 to 72 hours to approve funds for our esteemed clients based in Los Angeles. The Cost Disclosure Statement must state clearly the amount financed, the total costs involved, the length of time, the frequency and amount of payments to be made as well as state clearly the method of how payment is made, an explanation of pre-payment consequences, and state the total cost of the financing as an annualized percentage rate. *Images used are not employees of the law firm*, settle your merchant cash advance loans for less than what you owe. It will also remain the same whether you choose to pay the MCA back in two months or a year. The problem with most conventional financing options is that they take time and have strict measures. 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. 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. You may be asked for your business tax ID, Social Security number and general information about your business. A company that specializes in debt reduction or restructuring may be able to aid a business that is having trouble making MCA payments. THE LAW OFFICES OF ALAN ABERGEL, P.C. 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. 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. These alternative solutions include merchant cash advances and factoring. Do NOT let a predatory loan disguised as a purchase of accounts receivables destroy your revenues and business with daily payments at predatory and abusive interest rates. About a year later,Johnson and her husband founded Advance Me, a MCA Funder. Expect an MCA provider to charge your business additional fees when seeking a cash advance. If you are operating as a lender and a business owner cant repay their MCA on time, that is when you may want to seek legal action. formId: "3d8de059-05d4-4321-8a0a-53170b1a96b3" Global Legal Law Firm doesnt just talk a big game, we actually deliver. Alternative Funding Group offers an MCA in California to a business that needs a lump sum of capital to move ahead. 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. While contemplating this option, you may have wondered what the difference is between alternative financing and regular loans or whether it has the same impact on credit ratings. These exorbitant fees can cause serious cash flow issues for merchants. However, the Uniform Commercial Code does not regulate interest rates. Well need to see the last three bank statements too! How Long Has Merchant Cash Advance Been Around? Advice concerning state and federal financial and lending laws. The primary allegations by the FTC concerning marketing relate to misleading claims. 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. You will also have to pay a fee for the service. Fighting, Settling and Litigating for Merchants across California and the entire United States. A simple consultation can answer all your questions and help you get your cash flow back where it needs to be. Our experts will review your information and contact you for further discussions. Later her company would become CAN Capital. 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%. The money is usually a percentage of your debit card or credit card sales withheld by an MCA provider to settle a cash advance. If you have a stable cash flow, it may take you a shorter time to pay back the 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. Leslie H. Tayne, Esq. Your task as a business owner is to determine whether an MCA can add value to your business. These Complaints filed by the Federal Trade Commission and the New York Attorney General provide a glimpse into what merchant cash advance companies should expect in a regulated future for the industry. Nearly three years after California became the first state to pass a business loan and merchant cash advance disclosure law (SB 1235), the actual disclosure rules themselves are finally nearing completion. We're a national leader providing business financing with a 99% approval rating. The payments can then be paid back in a specified time frame. Most lenders have a fixed amount that they recover from businesses whether the business is thriving or not. 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. Send Grant Phillips Law your Merchant Cash Advance contract for a free legal review and analysis for compliance with California law. An MCA is also a great solution for settling unexpected payments and debt payments. Contact Us:-GRANT PHILLIPS LAW, PLLC [email protected] 516.670.5165 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. This can be any amount from a thousand dollars to hundreds of thousands of dollars. Interestingly the new California Law refers to commercial financing, meaning the loan or financing is for a corporate / commercial purpose. MCA providers have attractive eligibility standards, which make it easy for most small enterprises to qualify. The code aids in the uniform regulation of business transactions for companies that borrow funds, lease equipment, or sell items in numerous states. California Merchant Cash Advance is not considered a business loan. Call us today for a business loan at 800-630-4214 for a consultation on merchant cash advances or any of our financing programs. MCAs are not considered a loan and there is no federal oversight of the advances. We are here to help you any way we can. The California Department of Business Oversight (DBO) recently published an Advisory Opinion regarding merchant cash advance contracts that states as follows: The Department of Business Oversight (DBO) expects that small businesses may struggle to make payments under existing loans or other financing products as a result of government- issued stay-at-home orders. Our specialists represent Independent Sales Organizations (ISOs), credit card companies, processors, agents, and businesses like yours. Your choice depends on the amount your business needs to recover from a particular financial hurdle. How Do You Qualify for a Merchant Cash Advance? Certain considerations have been used in recent cases examining whether merchant cash advance agreements are sales or loans, determining whether the transaction provides for absolute or dependent payback. 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. We understand this is a confusing and stressful time for you. Grant Phillips Law, Merchant Cash Advance Attorney California. Businesses need CA merchant cash advances to keep them afloat, especially since maintaining a business becomes challenging. Our firm has seen interest rates greater than 400% per annum. The DBO encourages small businesses to review the terms of their existing financing products to determine whether they may be entitled to relief and report finance companies that fail to honor contractual terms that provide relief. 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. If you did, the MCAs can use the COJ (also a personal judgment) to collect from your own assets! Specifically,an individual by the name of Barbara S. Johnson is listed as the officialinventor of split-funding, a system that allows for automatic loan repayment to the funders from a single credit card processor shared with the Merchant. Your credit card processing firm will facilitate repayments for the cash advance. Because merchant cash advances are not deemed loans, they are not subject to any regulations. Drafting of loan and credit documents for. She's . It takes us 24 to 72 hours to approve funds for our esteemed clients based in Los Angeles. Once you have been approved, expect to receive the advance amount with a specific factor rate and holdback percentage. If you have a merchant cash agreement and the situation with your business profits has changed, contact our attorneys to help negotiate on your behalf! Your Merchant Cash Advance Attorneys California to preserve your legal rights, enforce those rights and protect you and your business. Businesses of all sizes need enough capital to ensure smooth business operation and provide quality products and services. Finally, the FTC also claims that defendants made threatening calls to consumers related to repayment of the advances. If youve received notice from your lender, you may be asking yourself what a merchant cash advance lawsuit is and what it entails? 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. Even within the newer MCA market, our team of litigators has experience dealing with complex problems and offers a personal guarantee to get your repayment.
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