Connecticut Merchant Cash Advance Attorney
Connecticut Merchant Cash Advance Attorney – A Helpful Guide
Getting a merchant cash advance can seem like an easy way for small businesses to get quick cash, but these advances come with big risks. If your Connecticut business has merchant cash advance debt, you may be facing aggressive collection tactics or even lawsuits. Don’t go it alone – consult a knowledgeable Connecticut merchant cash advance attorney before it’s too late.
In this article, we’ll walk you through everything you need to know about merchant cash advances in Connecticut. We’ll explain how they work, discuss key laws and legal precedents, look at common defenses and strategies, and help you understand when it’s time to call a merchant cash advance lawyer for help.
What is a Merchant Cash Advance?
A merchant cash advance (MCA) provides a business with a lump sum of cash in exchange for a percentage of future credit card sales. It is not technically a loan, so MCA companies can skirt consumer protection laws that regulate loans and charge sky-high rates.
Here’s how it works: the MCA company gives you an upfront sum, say $100,000. In exchange, they take a fixed percentage of your daily credit card sales – usually around 10-20% – until the advance is repaid. There are no fixed repayment terms. The faster your business generates credit card sales, the faster you pay back the advance.
MCAs appeal to small businesses because approval is quick and based on credit card sales, not personal credit. The application process is simple and funds can be deposited in days. But easy money comes with a price…
The Downsides of Merchant Cash Advances
A merchant cash advance can cripple a Connecticut small business if things go south. Consider these risks:
- Extremely high effective interest rates – often over 100% APR!
- Daily repayments that drain cash flow
- No flexibility for seasonal sales cycles
- Repayment terms tied to credit card sales, not ability to pay
- Aggressive collection tactics
- Personal liability – business owners are on the hook if the MCA can’t be repaid
Many businesses turn to MCAs when they are already struggling. Slow sales make it impossible to repay the advance, and the crushing debt compounds their problems. It is wise to consult a Connecticut merchant cash advance lawyer before signing any MCA agreement.
Key Connecticut Laws Governing Merchant Cash Advances
Connecticut regulates loans, but merchant cash advances fall outside many consumer protection laws because they are not technically loans. However, some important laws still apply:
Connecticut makes it illegal to charge over 12% APR on consumer loans under $15,000. Business loans can be charged up to 18% APR. MCA companies get around usury laws because merchant cash advances are not considered loans.
Deceptive Acts and Practices
Connecticut’s Unfair Trade Practices Act prohibits deceptive acts in commerce. The state Department of Banking can investigate MCA companies for predatory lending practices. Victims can sue for damages.
Confessions of Judgement
Many MCA agreements require the borrower to sign a confession of judgement. This allows the lender to seize assets without notice or a court hearing if the borrower defaults. In Connecticut, confessions of judgement are allowed but strictly regulated.
While civil usury laws do not apply, criminally charging over 12% APR is illegal in Connecticut. However, criminal usury is rarely prosecuted.
A good Connecticut merchant cash advance lawyer can analyze the fine print of any agreement to identify violations of state and federal law. Violations may provide leverage to renegotiate terms or invalidate the MCA contract.
Federal Regulations and Merchant Cash Advances
Merchant cash advances mainly fall outside federal lending regulations, but some still apply:
- Truth in Lending Act – Requires lenders clearly disclose all costs and terms
- Fair Debt Collection Practices Act – Prohibits abusive collection tactics
- Electronic Fund Transfer Act – Governs withdrawals from bank accounts
A Connecticut MCA lawyer can review if federal consumer protection laws apply to your case. Violations may invalidate the agreement or entitle you to damages.
Common Connecticut Merchant Cash Advance Defenses
There are defenses Connecticut business owners can assert against predatory merchant cash advance companies and debt collection lawsuits. A merchant cash advance attorney can help you understand if any these defenses apply:
No Valid Agreement
Was the MCA agreement invalid from the start? Reasons it may be void or voidable include:
- Forgery of signatures
- Unauthorized signer
- Signer lacked capacity or authority to bind the company
- Duress or coercion
- Unconscionable terms
- Violations of state/federal laws
Breach of Contract
Did the MCA company breach the agreement? For example:
- Withdrawing more than permitted from bank account
- Failing to clearly disclose fees and repayment terms
- Refusing to work with borrower in good faith
Has the MCA company collected far more than the advance amount? Repaying $200,000 on a $100,000 advance may qualify as unjust enrichment.
Does the effective interest rate exceed Connecticut’s civil usury limits? Usury may invalidate the agreement.
An experienced Connecticut MCA lawyer can analyze the facts and determine if asserting any of these defenses against an MCA company could get your case dismissed or force a favorable settlement.
Steps to Take Before Signing a Merchant Cash Advance Agreement
The best defense is a good offense. Consult a Connecticut merchant cash advance attorney before signing any MCA contract. Here are some steps your lawyer can take to protect you:
- Review the agreement terms and disclosures
- Explain your rights, liabilities, and obligations
- Calculate the true cost of the advance
- Assess if the MCA is usurious
- Negotiate better terms
- Make sure you understand everything you are signing!
Preventing problems down the road starts with understanding your rights and responsibilities up front.
What to Do if You Are Sued for Merchant Cash Advance Debt
When a Connecticut business defaults on a merchant cash advance, the MCA company may sue for repayment. These lawsuits can seek to seize both corporate and personal assets. Don’t panic – fight back with the help of an experienced Connecticut MCA attorney.
Here is the general process if you are sued for defaulting on a merchant cash advance:
- The MCA company files a lawsuit against your business and/or you personally
- You are served with a summons and complaint
- Your Connecticut merchant cash advance lawyer files an answer responding to the lawsuit within the required timeframe
- Your lawyer asserts defenses such as those discussed above
- Discovery is conducted, where evidence and documents are exchanged
- Your lawyer negotiates a favorable settlement or takes the case to trial
With an aggressive merchant cash advance lawyer on your side, many lawsuits can be dismissed quickly or settled for a fraction of the amount demanded. Don’t wait until you lose a judgment – call an attorney as soon as you are sued.
Negotiating and Settling Merchant Cash Advance Debt
Settling merchant cash advance debt is often faster, cheaper, and less risky than fighting it in court. An experienced Connecticut MCA attorney can negotiate deals such as:
- Lump-sum settlements for less than you owe
- Reduced regular payments
- Lower interest rates
- Forgiveness of fees, penalties, and interest
Skilled lawyers know how to bring MCA companies to the table and hammer out settlements that business owners can live with. Don’t wait until you are drowning in debt – talk to a merchant cash advance lawyer about your options now.
Alternatives to Merchant Cash Advances in Connecticut
The risks and costs of merchant cash advances often outweigh the benefits for Connecticut small businesses. Before going the MCA route, consider safer financing options such as:
- Bank loans – Higher approval standards but lower rates and more flexible terms
- SBA loans – Backed by the government to encourage small business growth
- Business credit cards – Revolve debt instead of selling future receivables
- Equipment financing – Borrow against specific assets you need
- Invoice factoring – Sell unpaid invoices for immediate cash
- Angel investors – Get equity investment rather than debt
A Connecticut small business lawyer can explain the pros and cons of various financing options. While merchant cash advances are easy to get, they are rarely the best choice.
Find a Connecticut Merchant Cash Advance Attorney Near You
Are you losing sleep over merchant cash advance debt? Before it’s too late, speak to a knowledgeable Connecticut MCA lawyer. Look for attorneys experienced fighting MCA companies in court and at the negotiating table.
A qualified lawyer can analyze your case, advise you of your rights, and take action to resolve MCA debt. Don’t wait until you are sued – the sooner you call for help, the more options you have.
With an aggressive merchant cash advance attorney on your side, you can get your finances back on track and save your Connecticut small business. Don’t go it alone – pick up the phone and call for expert legal help today.