San Francisco Merchant Cash Advance Attorney

San Francisco Merchant Cash Advance Attorney

Merchant cash advances can be a great option for small businesses in San Francisco that need fast capital. But these financing products also come with risks, like high costs and confusing contracts. Working with an experienced merchant cash advance attorney in San Francisco can help you understand these agreements and protect your business.

How Merchant Cash Advances Work

A merchant cash advance (MCA) provides a lump sum of money to a business in exchange for a percentage of future credit card sales. This is not a loan – the MCA company purchases your future receivables. You repay the advance from a set percentage of daily or weekly card transactions.MCAs don’t have interest rates. Instead, providers charge a factor rate, usually 1.1 to 1.5. This is the amount you’ll repay above the original advance. For example, if you get a $50,000 MCA at 1.4, you’ll repay $70,000 total ($50,000 x 1.4 = $70,000). To calculate the Annual Percentage Rate (APR), divide the amount of fees charged by the length of the agreement. A $20,000 fee repaid over one year equals an APR of 200%. This helps compare MCAs to loans.

Pros and Cons of Merchant Cash Advances

MCAs offer fast funding with minimal documentation, which is appealing for many small businesses. Approval is also based more on card sales versus credit scores. 

However, the high costs and confusing contracts mean MCAs can create an expensive cycle of debt. It’s important to calculate the APR and understand the agreement before signing.


  • Fast funding, often within 24 hours
  • Minimal documentation required
  • Flexible qualification requirements


  • Very high costs, with APRs frequently over 100% 
  • Repayment deducted from daily/weekly card sales
  • Confusing factor rates instead of interest rates
  • Lack of federal regulation

Merchant Cash Advance Regulation in California

California has laws regulating MCAs and other commercial financing. Under Senate Bill 1235, providers must disclose the annual percentage rate (APR) upfront. This helps small businesses understand the true costs. 

The state also limits certain unfair practices. MCA companies cannot: 

  • Call or threaten you if you fall behind on payments
  • Contact your customers about redirecting payments
  • Lock your credit card terminals

However, MCAs aren’t subject to California’s usury caps on interest rates. Make sure you understand the APR before signing.

Working With a Merchant Cash Advance Attorney

A merchant cash advance attorney can help you:

  • Review the agreement – They’ll explain the factor rate, fees, and repayment structure so you understand the costs. 
  • Negotiate better terms – An attorney can try to negotiate a lower factor rate or longer repayment period. 
  • Settle debt – If you fall behind, they can potentially settle your MCA debt for less than you owe. 
  • Defend against harassment – They can stop unlawful collection practices prohibited under California law. 
  • Explore alternatives – They’ll advise if other financing like loans may be better for your business. 

Beware of Predatory Practices

While MCAs can help businesses access capital, some providers use predatory tactics. Watch for: 

  • Excessively high factor rates
  • Misleading statements about costs and terms
  • Aggressive collections and threats
  • Unauthorized withdrawals from bank accounts

Work with a reputable MCA company or attorney to avoid these practices. The Federal Trade Commission has cracked down on some unscrupulous providers. 

When Merchant Cash Advances Make Sense

Used carefully, MCAs can provide fast financing to cover short-term capital needs or expenses:

  • Seasonal inventory purchases
  • New equipment
  • Marketing campaigns
  • Payroll during slow periods

The flexibility and speed of MCAs can be helpful, but compare costs to loans carefully. Avoid using them for long-term investments or operating expenses.

Alternatives to High-Cost Merchant Cash Advances

Before considering an MCA, look into:

  • SBA Loans – Government-backed small business loans with lower costs. 
  • Business Lines of Credit – Reusable financing that offers flexibility. 
  • Invoice Factoring – Borrow against unpaid customer invoices. 
  • Equipment Financing – Finance specific equipment purchases. 
  • 401(k) Business Financing – Use 401(k) funds and repay yourself. 
  • Friends & Family – Borrow from people you know at lower rates. 

While these may take more time and paperwork, they provide cheaper long-term financing.

Finding the Right San Francisco Merchant Cash Advance Attorney

When researching attorneys, look for these key qualifications:

  • MCA experience – They should have extensive experience with MCA agreements, laws, and companies. 
  • California knowledge – Ensure they understand state regulations for MCAs and commercial financing. 
  • Negotiation skills – They should have a strong record of negotiating settlements on behalf of clients. 
  • Small business focus – Their practice should cater to the needs of small businesses and startups. 
  • Reasonable fees – Avoid attorneys who charge excessive upfront fees before providing services.

The California Bar Association offers referrals and reviews to help find qualified local attorneys. Look for lawyers that offer free consultations to discuss your options at no cost.With the right legal guidance, San Francisco small businesses can use merchant cash advances effectively while avoiding unfair practices. Partnering with an experienced attorney can help you leverage these products to access capital, while protecting your long-term financial health.