Nashville Merchant Cash Advance Attorney
Nashville Merchant Cash Advance Attorney
Hey y’all! If your Nashville business is struggling with merchant cash advance debt, you’ve come to the right place. I’m a local lawyer who helps folks in our community get out from under these tricky financial products. Merchant cash advances can seem like quick and easy money at first, but they often trap businesses in an impossible hole. Let me explain what merchant cash advances are, the pros and cons, and most importantly – how I can help you fight back against shady lenders and get your business back on track.
What is a Merchant Cash Advance?
A merchant cash advance (MCA) provides upfront cash to a business in exchange for a percentage of future credit card sales. Let‘s break it down:
- You get a lump sum of cash right away that you can use for any business need – making payroll, stocking inventory, marketing, etc. This money is NOT a loan.
- In exchange, the MCA company takes a fixed percent of your daily credit card sales until the advance is paid back in full. This may take a few months or over a year.
- There’s no set repayment schedule. The amount taken each day varies based on how much you sell.
This flexibility is why MCAs appeal to many small businesses who can’t qualify for traditional bank loans or need funding fast. Approval is quick and you don’t need collateral.But (and this is a big BUT) merchant cash advances come with huge risks that aren’t always clear at first glance. Keep reading to understand the pros and cons.
The Good, the Bad and the Ugly of Merchant Cash Advances
Here are the main pros of merchant cash advances:
- Fast approval – You can get an advance approved in days or weeks, much faster than a standard small business loan.
- No collateral required – MCA companies don’t require any property or assets to secure the advance.
- Payments tie to sales – When your sales are up, more comes out of your account to pay back the advance. When sales are slow, payments go down. This flexibility helps cash flow management.
- Fewer eligibility requirements – MCA companies are more lenient on credit score and business history compared to banks.
- Use funds for any purpose – Once approved, you can use the lump sum for any business need without restrictions.
Now let’s talk about the biggest cons of merchant cash advances:
- Extremely high cost – The annual percentage rate (APR) on MCAs typically ranges from 60% to well over 200%. That’s insane! Much pricier than even credit cards or online loans.
- Payments are fixed regardless of sales – Many MCA companies take a set daily amount from your account based on your average sales. If you have a slow period, you still pay the fixed amount which drains your accounts.
- Easy to be trapped in debt cycles – It’s tempting to take a new advance to pay off the old one, and soon you’re buried in multiple advances you can’t repay.
- Vague terms let providers change payments – The contracts give lots of power to the MCA company to raise your payments anytime they want.
- First priority on credit card sales – MCA companies take their share of sales right off the top before you pay any other expenses like payroll or rent.
As you can see, the cons clearly outweigh the pros when it comes to merchant cash advances. The costs and risks are EXTREMELY high compared to other small business financing options.
How Merchant Cash Advance Companies Take Advantage of Small Businesses
Many business owners don’t realize just how dangerous MCAs are until it’s too late. Here are some of the predatory ways providers take advantage:
- Deceptive marketing – MCA companies make it sound like you’re just selling a percentage of future sales, not taking a usurious loan with 60%+ interest rates.
- Pressure high daily payments – They estimate your average sales higher than reality to pressure you into accepting a high fixed daily payment.
- Lock you into endless debt cycles – As soon as you pay off one advance, they push you to take another one to keep the money flowing to them.
- Vague contract terms – The contract gives them lots of power to raise your payments anytime for any reason.
- First priority on sales – They take their payments before you pay critical expenses like payroll and rent, crippling cash flow.
- File confessions of judgement – Many providers get you to sign a confession of judgement upfront allowing them to seize funds from your bank accounts if you default.
- Aggressive collections – If you fall behind, they quickly slap you with lawsuits, freezes on bank accounts, threats to shut down your business, and other intimidation tactics.
This is why it’s CRITICAL to have an experienced attorney review any MCA agreement BEFORE you sign. Which brings me to…
How a Nashville Merchant Cash Advance Attorney Can Help You
If you‘re struggling to pay off a merchant cash advance in Nashville, I can help in several important ways:
- Review the full agreement – I’ll review your MCA contract to fully explain the terms, costs, conditions and your rights in plain English. No more surprises.
- Renegotiate for better terms – There may be ways to negotiate lower payments, longer repayment terms, or other concessions to make it more manageable.
- Add protective provisions – I can draft amendments to the agreement protecting you in case sales drop or other circumstances change.
- Limit personal liability – If possible, I’ll remove any personal guarantees so your personal assets aren’t at risk if the business defaults.
- Dispute predatory practices – I’ll fight back against shady rate hikes, improper payments, or other violations of the agreement.
- Defend against lawsuits – If they sue for default, I’ll build the strongest case possible and try to get the lawsuit dismissed or damages reduced.
- Stop bank levies – If they try to freeze your bank accounts, I can request emergency court hearings to unfreeze the funds.
- Explore bankruptcy options – Filing Chapter 11 or Chapter 7 bankruptcy may be an option to eliminate the debts and get a fresh start.
The bottom line is I know how to fight back against MCA companies and protect your rights. Having an experienced lawyer on your side can save you thousands in excessive payments and prevent the lender from shutting down your business.
4 Smart Tips to Avoid Merchant Cash Advance Problems
Now that you know the risks of merchant cash advances, here are some smart tips to avoid headaches down the road:1. Read the fine print – Have an attorney review the full contract and explain it to you clearly so you understand the terms. Don‘t sign anything you don’t fully grasp.2. Consider alternatives first – Explore more affordable financing options like traditional bank loans, SBA loans, credit cards, family loans, etc. MCAs should be a very last resort.3. Start with a small advance – If you do take an MCA, start small so it’s easier to repay. Don‘t take the maximum amount they approve you for.4. Have an exit strategy – Know exactly how you will pay off the advance before you sign up. Don’t count on refinancing or taking another advance.Following this advice can help you avoid getting trapped in the merchant cash advance debt cycle.