Florida’s small business economy — tourism, hospitality, construction, healthcare, professional services — makes it one of the largest markets for merchant cash advances in the country. It is also a state where the legal tools for challenging MCA agreements are stronger than most business owners realize.
MCA funders target Florida businesses because the industries are seasonal, the cash flow cycles are volatile, and the demand for bridge financing is constant. A restaurant in Miami Beach that needs working capital for the winter season, a contractor in Tampa awaiting payment on a completed project, a medical practice in Orlando bridging an insurance reimbursement delay — these are the businesses that sign MCA agreements under pressure and discover the cost only after the daily withdrawals begin.
Florida’s legal framework provides several avenues for relief. The state’s usury statute applies to commercial transactions under certain circumstances, its consumer protection law is broad, and its courts are increasingly familiar with MCA disputes. The combination of these legal tools creates a more favorable environment for MCA borrowers than the industry would prefer.
The Legal Landscape in Florida
Florida Statutes Section 687.02 sets the general usury limit at 18% per annum for loans under $500,000. Section 687.071 establishes criminal usury at 25% per annum — the same threshold as New York. A criminally usurious loan in Florida is not only void but subjects the lender to criminal penalties including imprisonment. The statute applies to any extension of credit, which a court may interpret to include a recharacterized MCA.
Florida’s Deceptive and Unfair Trade Practices Act, codified in Chapter 501, provides a cause of action for businesses harmed by deceptive or unfair practices. The statute covers misrepresentation of MCA costs, failure to honor contractual reconciliation rights, deceptive collection practices, and omission of material terms during the solicitation process. Prevailing plaintiffs can recover actual damages, attorney’s fees, and court costs. The statute’s fee-shifting provision means the business owner’s attorney is compensated by the defendant if the claim succeeds, reducing the financial barrier to litigation.
Florida does not authorize confessions of judgment. Florida Statutes Section 55.05 requires that a judgment be entered only after due process — a filed complaint, service of process, and an opportunity to respond. This is a critical protection. A New York confession of judgment cannot be directly domesticated in Florida without meeting Florida’s full faith and credit requirements, which include an opportunity to challenge the judgment’s validity. The funder cannot bypass the judicial process in Florida the way it can in New York.
The Florida Department of Financial Services and the Office of Financial Regulation have oversight authority over lending activity in the state. An entity making loans in Florida without proper licensing may face regulatory consequences. If the MCA is recharacterized as a loan, the funder’s licensing status becomes relevant.
Recharacterization and Usury
Florida courts apply the same substance-over-form analysis used nationally to determine whether an MCA is a loan. The inquiry focuses on risk: did the funder accept the possibility of receiving less than the contracted amount? If the contract eliminates that risk through fixed payments, personal guarantees, confessions of judgment, and non-functional reconciliation clauses, the transaction is a loan regardless of its label.