Washington Merchant Cash Advance Attorney
Washington Merchant Cash Advance Attorney: Your Guide to MCA Debt Relief
Merchant cash advances have become an increasingly popular form of alternative business financing in Washington. Unlike traditional bank loans, merchant cash advances provide fast access to capital with minimal paperwork. However, MCAs come with some major drawbacks that Washington business owners need to understand before signing an agreement.The costs and terms of merchant cash advances can be predatory, trapping business owners in debt cycles they can‘t escape. That‘s where working with an experienced Washington merchant cash advance attorney can help.
How Merchant Cash Advances Work
A merchant cash advance provides funding upfront in exchange for a fixed percentage of future credit card sales over a set period of time
. The amount due each day or week is taken automatically as a percentage of credit card sales.For example, a restaurant might get an advance of $10,000 and agree to pay back $300 per day until $15,000 is repaid. The term is usually 4-10 months. There are no fixed payments; the amount due fluctuates based on credit card sales.This type of financing appeals to businesses because:
- Funding can be obtained quickly, sometimes in as little as 24 hours
- There are fewer eligibility requirements than bank loans
- Payments adjust up and down with sales
However, the costs and risks are much higher compared to traditional loans.
High Costs and Risks
While merchant cash advances seem easy to obtain, the costs are extremely high. Advances typically have an annual percentage rate between 60-200%
. This is much higher than even credit cards or online lenders.Other risks include:
- Daily payments are taken regardless of actual sales, which can quickly drain a business’s accounts
- It’s easy to get trapped in debt cycles, taking new advances to pay off old ones
- Advances have vague terms that let providers change payments and seize assets if they aren’t satisfied
- Providers have first priority access to credit card sales ahead of other expenses
Unfortunately, many business owners don’t realize how dangerous merchant cash advance agreements can be until it’s too late. That’s why it‘s critical to have an experienced attorney review any proposed agreement first.
How a Merchant Cash Advance Attorney Can Help
A merchant cash advance attorney understands the legal side of these complex financial products. They can help Washington business owners in several important ways:
- Review the full agreement and explain all terms, costs, conditions and risks in plain language
- Negotiate more favorable terms like lower payments or longer repayment periods
- Add protective provisions to the agreement
- Develop strategies to limit personal liability if the business defaults
- Dispute predatory lending practices
- Defend against collection lawsuits and asset seizures
Having an attorney involved before signing an agreement can potentially save a business owner thousands of dollars and prevent devastating lawsuits down the road.
Important Legal Protections
There are also some important federal and Washington state laws that provide protections around merchant cash advances:
- The federal Truth in Lending Act requires disclosures of APR and total costs
- In Washington, the Collection Agency Act regulates what collection tactics lenders can use to recoup debts
- The Washington Consumer Loan Act has protections against predatory lending and caps interest rates on certain loans
A merchant cash advance attorney will know how to leverage these protections for the business owner’s benefit.
Beware of Scams
Unfortunately, the merchant cash advance industry is also ripe with scams and predatory schemes. Many so-called lenders are not actually registered businesses. They lure in business owners with promises of fast money, then disappear with the upfront fees and leave the applicant with nothing
.Warning signs of a scam include:
- Requests for upfront fees before funding is provided
- Refusal to provide documentation or company information
- High-pressure sales tactics
- Too-good-to-be-true offers of approval
- Lack of transparency around rates, terms and costs
Reputable merchant cash advance providers should be transparent, registered businesses willing to fully explain their products. Having an attorney vet any agreement is the best way for a business owner to avoid scams.
Alternatives to Consider First
Because of the high costs, it’s smart for Washington business owners to consider alternatives before turning to a merchant cash advance. Some options include:
- SBA loans with lower interest rates
- Business lines of credit or credit cards
- Invoice factoring instead of credit card sales
- Friends/family loans with clear terms
- Crowdfunding from customers or community
- Using other forms of collateral for a loan
Working to improve your credit score and financial management can also help access more affordable financing options. While merchant cash advances provide fast funding, the long-term costs are exceptionally high.
How to Find a Qualified Merchant Cash Advance Attorney
If you do decide to move forward with a merchant cash advance, it’s critical to have an attorney review the agreement first. Here are tips for finding qualified legal help:
- Search state bar associations for lawyers experienced with MCAs
- Ask for referrals from other local business owners
- Look for attorneys who focus specifically on debtor/creditor law
- Find someone local who understands Washington laws
- Interview lawyers to ask about their specific MCA experience
Avoid any attorney who pushes you to sign an MCA or downplays the risks. A qualified lawyer will take time to explain the agreement and represent your best interests.
What to Expect During a Consultation
In your initial consultation with a prospective merchant cash advance attorney, you can expect:
- To provide details about your current MCA agreement and business finances
- For the attorney to ask questions about your situation and goals
- An explanation of all your options, legal rights and potential outcomes
- Advice on next steps to resolve your MCA debt
- Information about attorney fees and billing arrangements
A good lawyer will listen to your unique situation and tailor solutions to match your needs. Make sure to ask plenty of questions during the consultation so you understand exactly what services will be provided.
Services a Merchant Cash Advance Attorney Can Provide
Once retained, there are a number of ways a merchant cash advance attorney can help:
- Review the MCA contract for illegalities or violations
- Renegotiate the agreement for better terms
- Communicate with the MCA provider on your behalf
- Help modify payments to improve cash flow
- Defend against lawsuits related to the MCA
- File countersuits against predatory lenders
- Remove liens placed against your business
- Settle debt for less than what’s owed
- Declare bankruptcy to eliminate MCA debt
An experienced attorney has the knowledge to aggressively defend your interests against MCA companies. Don’t hesitate to discuss all your options.
What MCA Debt Relief Could Cost
Attorney fees vary based on experience, location and complexity of each case. However, here are some ballpark figures:
- Contract review: $500 – $1,500
- Debt settlement: $2,000 – $5,000
- Lawsuit defense: $5,000 – $15,000+
- Bankruptcy: $5,000 – $10,000+
Many attorneys offer free initial consultations. Be sure to understand fee structures before retaining someone. Options include flat rates, hourly billing, or contingency fees based on debt relief obtained.