Louisiana Merchant Cash Advance Attorney
Louisiana Merchant Cash Advance Attorney: A Helpful Guide for Small Businesses
Merchant cash advances have become an increasingly popular form of alternative financing for small businesses in Louisiana. Unlike traditional bank loans, merchant cash advances provide quick access to capital by advancing a lump sum in exchange for a percentage of future credit card sales.While merchant cash advances may seem like an easy solution for businesses needing fast cash, these financing arrangements come with some major drawbacks that business owners should be aware of. Predatory lending practices and confusing contract terms have left many Louisiana small business owners stuck in debt.If you have signed a merchant cash advance agreement in Louisiana that you’re now struggling to repay, it’s important to understand your rights and explore your options. Consulting with an experienced Louisiana merchant cash advance attorney can help protect your business as you navigate this complex process.
Overview of Merchant Cash Advances
A merchant cash advance, often referred to as an MCA, provides capital to a business in a lump sum upfront. The business then repays the advance through daily or weekly debits from their credit card receipts over a defined period, usually 6-18 months. The repayments are taken as a percentage of credit card sales, often ranging from 10-20%.Unlike a small business loan, there is no fixed repayment schedule or regular monthly installments with a merchant cash advance. The amount debited fluctuates based on the volume of credit card sales each day or week.On the surface, merchant cash advances appeal to business owners because they seem fast, convenient, and have flexible qualification requirements compared to traditional bank loans. However, there are some significant downsides to be aware of:
- High costs – The total repayment amount can end up being exorbitantly high compared to the original advance. Factoring fees and interest rates over 100% are common.
- Aggressive collections – MCA companies will aggressively pursue repayments, including freezing merchant accounts or pursuing legal action over even small defaults.
- Onerous contract terms – MCA contracts often contain confusing terminology and lack transparency about total costs. Vague default clauses also leave businesses vulnerable.
- Overreliance on credit card sales – Having repayments tied to credit card receipts leaves businesses exposed if card processing is disrupted for any reason.
Common Legal Issues with Merchant Cash Advances
The lack of oversight and regulation of the merchant cash advance industry in Louisiana has led to many concerning legal practices. Some of the most common legal issues faced by small businesses include:
- Deceptive marketing – MCA providers often misrepresent or omit key information on costs, repayment terms, and eligibility during marketing and sales.
- Confusing contract terms – Vague language and complex terminology make it very difficult for business owners to fully grasp what they are agreeing to.
- Excessive fees and interest rates – Interest rates can exceed 100% APR, which may be illegal under Louisiana usury laws capping interest on loans.
- Aggressive collections – MCA companies frequently engage in aggressive tactics like freezing merchant accounts over even small repayment issues.
- Lack of transparency – Contracts lack transparency on total repayment costs, repayment terms, default clauses, and other key factors.
- Fraud – There have been reports of some MCA providers in Louisiana engaging in outright fraud.
Working with a Louisiana Merchant Cash Advance Attorney
If you are concerned about the terms of your merchant cash advance agreement or struggling to make repayments, contacting an experienced Louisiana MCA attorney is highly recommended. Here are some key ways a knowledgeable attorney can assist:
- Reviewing the MCA contract – They will carefully review your agreement to identify areas that unfairly favor the MCA company over your business.
- Explaining your rights – The attorney will inform you of your legal rights under Louisiana law pertaining to MCA contracts and predatory lending protections.
- Renegotiating terms – They may be able to negotiate with the MCA provider to remove or alter contract clauses that are unfavorable to your business.
- Defending against lawsuits – If legal action is taken against your business over the MCA, the attorney can defend your interests in court.
- Avoiding scams – They can help vet MCA companies to ensure you avoid dealings with fraudulent or unscrupulous providers.
- Debt relief – They may be able to negotiate a settlement or payment plan if you are struggling to make repayments and facing collections.
Louisiana Merchant Cash Advance Laws and Regulations
Unlike many other states, Louisiana has enacted some laws and regulations aimed at protecting small businesses from predatory lending practices by merchant cash advance companies:
- Interest rate caps – Louisiana sets a maximum allowable interest rate on loans under [La. R.S. §9:3519]
. This limits how much MCA companies can charge.
- Licensing requirements – The [Louisiana Office of Financial Institutions]
requires MCA companies operating in the state to be licensed lenders. This provides oversight.
- Disclosure requirements – Louisiana laws require enhanced disclosures from MCA companies on repayment terms, costs, interest rates, and other key contract details.
- Banned practices – Certain extremely predatory practices often used by MCA companies, like confessions of judgement, are prohibited under Louisiana law.
While Louisiana provides more protection than many states, working with an attorney is still recommended due to the complexity of MCA contracts. They can ensure your rights are upheld.
Finding a Qualified Louisiana MCA Attorney
If you have signed a merchant cash advance agreement in Louisiana and need legal counsel, here are some tips for finding a qualified attorney:
- Search the [Louisiana State Bar Association]
directory for attorneys experienced in financial services law, consumer law, and commercial litigation.
- Look for lawyers located near you who are familiar with the local legal environment.
- Ask other local small business owners for referrals to attorneys they have used for MCA issues.
- Search for lawyer review sites like [Avvo]
to research qualifications and experience.
- Schedule consultations with a few attorneys to discuss your specific situation before deciding who to hire.
- Look for attorneys who offer free initial consultations and flexible payment arrangements.
- Verify the lawyer is licensed in Louisiana and has a clean disciplinary record.
- Choose an attorney you feel comfortable with and who understands your goals.
Having the right legal guidance can help Louisiana small business owners protect their interests when dealing with merchant cash advance companies. Be sure to do your research to find an experienced attorney you trust.