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Last Updated on: 14th September 2023, 12:37 am
Merchant Cash Advance Attorney Tennessee
Merchant cash advances can be a good way for small businesses to get money fast. But sometimes merchant cash advance companies act in unfair ways. If you own a small business in Tennessee and have issues with a merchant cash advance, you may need a merchant cash advance attorney.
This article will explain what merchant cash advances are, issues businesses may have, and how a Tennessee merchant cash advance attorney can help.
What is a Merchant Cash Advance?
A merchant cash advance is a way for businesses to get money fast. It is not technically a loan. Here is how it works:
- The merchant cash advance company gives the business an upfront sum of money.
- In exchange, the business agrees to pay back a fixed percentage of its credit card sales each day until the advance is paid off.
- There is no set repayment schedule. The business pays back the advance as credit card sales come in.
- The fixed percentage is deducted from the business’s merchant account daily.
Unlike a loan, there is no set interest rate or monthly payment. The business pays back the advance through a percentage of daily credit card sales.
Pros and Cons of Merchant Cash Advances
Merchant cash advances have pros and cons for small businesses:
- Fast funding. Businesses can get funds in days or weeks.
- Easy to qualify. The business’s credit score doesn’t matter.
- Flexible payments. Repayment comes from a percentage of credit card sales.
- Funds can be used for anything like payroll, supplies, emergencies.
- Expensive. The fixed percentage deducted daily can equate to a high APR.
- Daily payments. Money is taken every day until it’s fully paid off.
- Payments vary. Payments go up and down based on credit card sales.
- Hard to budget. It’s hard to predict the total payback amount.
As you can see, merchant cash advances offer easy money fast. But the terms are less flexible than a small business loan. Daily deductions and varying payments make them hard to budget.
Common Merchant Cash Advance Issues in Tennessee
While merchant cash advances can help Tennessee small businesses quickly get funds, some companies engage in predatory practices. Common issues include:
- Excessively high repayment rates of 30-50% of daily credit card sales.
- Misrepresenting the annual percentage rate (APR) to seem lower.
- Requiring all business bank accounts as collateral.
- Requiring owners to personally guarantee repayment.
- Not allowing early repayment or payoff.
- Charging expensive penalties for late payments.
- Automatically deducting payments without notice.
- Refusing to modify terms when sales drop.
If you feel a merchant cash advance company is acting unethically or illegally, contact a Tennessee merchant cash advance attorney.
How Can a Tennessee Merchant Cash Advance Attorney Help?
A Tennessee merchant cash advance attorney can help in several ways if you have issues:
- Review the merchant cash advance agreement terms for potential violations of state laws.
- Send demand letters asserting your legal rights under Tennessee laws.
- Negotiate with the merchant cash advance company for better terms.
- Defend against lawsuits if the company sues for repayment.
- Sue for damages if the company violates state lending laws.
- Help modify the agreement if your business has financial troubles.
- Advise on bankruptcy should it become necessary.
The Ins and Outs of Merchant Cash Advance Attorneys
So your small business needs some quick cash to cover expenses or expand operations. You’ve heard about merchant cash advances as an alternative to traditional business loans. Maybe you already got one and now you’re underwater with payments. What do you do? This is when it may be time to call a merchant cash advance attorney. Keep reading to learn more about how these lawyers can help.
What is a Merchant Cash Advance?
A merchant cash advance (MCA) works differently than a regular small business loan. With an MCA, a company gives you an upfront lump sum of cash in exchange for a percentage of your future credit card and debit card sales. There’s usually no fixed repayment schedule. The MCA provider takes a set percentage of your daily credit card receipts until the full amount plus a fee is repaid.
Because it’s not technically a loan, MCAs avoid regulations that govern lending. This means the companies providing them can charge higher fees and interest rates. And if your business hits a slow period, you still owe the daily payments even if you’re not making sales. It’s easy to fall behind and owe far more than you originally received.
How Can a Merchant Cash Advance Attorney Help?
If you find yourself struggling to make the daily payments, it may be time to ask a merchant cash advance lawyer for help. An attorney experienced with MCAs can assist in several ways:
- Review your MCA agreement and look for prohibited terms or violations that could make it invalid. For example, some states cap the amount of interest and fees a provider can charge.
- Negotiate with the MCA company to reduce your daily repayment rate or total balance owed. Sometimes lenders will agree to avoid legal action.
- Defend you if the MCA company sues for breach of contract. Your lawyer can argue defenses to try and get the lawsuit dismissed or damages reduced.
- File for bankruptcy protection to eliminate or restructure your MCA debt through the court.
- Help renegotiate the MCA into an installment loan with fixed payments if possible.
Having an attorney in your corner levels the playing field and gives you leverage when dealing with MCA providers. They have the legal knowledge to get your payments and balances lowered.
Common MCA Company Abuses
Some MCA providers engage in predatory practices that lawyers watch out for. Here are a few common problems they exploit:
- Excessively high fees and interest rates beyond legal limits
- Misrepresenting the agreement as a purchase of future receivables instead of a loan
- Requiring personal guarantees and liens on personal assets from business owners
- Failing to adequately disclose all costs, rates, and terms upfront
- Requiring repayment amounts so high the merchant can’t stay afloat
- Aggressive collection tactics like harassing calls and lawsuits
If an MCA company engages in illegal or abusive practices, your lawyer can get the agreement invalidated or force the provider to settle. You may be able to get damages reduced or eliminated altogether.
When to Call an Attorney
Don’t wait until an MCA provider sues or sends your account to collections. Get help from a lawyer as soon as you start struggling with payments. Signs it’s time to get legal help include:
- You can’t afford the daily payments and are using credit cards or personal funds to cover them.
- The MCA company won’t negotiate a lower repayment rate.
- You received aggressive calls or threats of legal action.
- You need to file bankruptcy but have MCA debt.
- You want to close or sell your business but still owe money.
The sooner you involve a lawyer, the more leverage you’ll have. Don’t let an intimidating MCA contract or aggressive collection efforts stop you from seeking legal advice.
Finding the Right Merchant Cash Advance Attorney
Not all attorneys have experience dealing with MCAs. Look for a lawyer that specifically advertises merchant cash advance relief or debt settlement services. Ask about their background helping other businesses:
- How many MCA cases have they handled?
- Do they have experience negotiating, settling, or suing MCA providers?
- Can they provide client references and testimonials?
- Will they review your agreement for prohibited terms or violations?
- Can they represent you if the MCA company sues?
A qualified MCA lawyer will be familiar with the common practices of providers and legal strategies to challenge them. They’ll know what defenses work best if a lawsuit is filed.
Also look for attorneys that offer free consultations. Discuss your situation first before agreeing to legal representation. Make sure you feel comfortable working with them.
Alternatives to Hiring an Attorney
Some businesses try working directly with the MCA provider to negotiate relief. But most companies won’t make significant concessions without legal prodding. Still, you could try:
- Asking for a lower daily repayment rate based on your current sales.
- Requesting a temporary reduction or forbearance until business picks up.
- Offering a lump-sum settlement for less than you owe.
- Proposing to pay off the balance over time in fixed installments.
Just know that MCA companies hold all the leverage without attorney representation. If you can’t get them to agree to affordable terms, don’t keep struggling alone. Hiring a lawyer levels the playing field.