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Jacksonville Merchant Cash Advance Attorney

Jacksonville Merchant Cash Advance Attorney – Your Guide to MCA Financing

Hey there! If you’re a small business owner in Jacksonville looking into merchant cash advances (MCAs), you’ve come to the right place. I know this type of financing can be confusing, so I wanted to break it all down for you in plain English. I’ll walk you through what MCAs are, the pros and cons, and most importantly – how an experienced Jacksonville MCA attorney can help you navigate the process.Let’s start with the basics – what is a merchant cash advance? Well, it’s a form of financing where a company gives you an upfront lump sum of cash in exchange for a percentage of your future credit card sales. I know, it sounds kinda weird and complicated at first.Here’s a quick example to show you how it works:

• Let’s say your coffee shop in Jacksonville brings in $10,000 per month in credit card sales.
• You need $50,000 fast to buy some new equipment.
• An MCA company offers you $50,000 upfront in exchange for 15% of your credit card sales until the advance is repaid.
• So each month you would pay the MCA company 15% of that $10,000 in credit card sales – that’s $1,500 – until the full $50,000 is repaid.

Make sense so far? The main difference between an MCA and a traditional bank loan is that the MCA has more flexibility in the repayment structure. With a loan you’d have fixed monthly payments, but with an MCA it fluctuates based on your sales volume each month.This flexibility is why MCAs can be attractive financing for small businesses like restaurants, retailers, or service companies with steady credit card sales. The variable payments rise and fall with your revenue.But (and this is a big BUT) – MCAs also come with some serious risks and drawbacks that you need to look out for. Let‘s get into those now…

The Downsides and Risks of Merchant Cash Advances

I don‘t wanna scare you away from MCAs completely. For some businesses, it’s a viable option for accessing quick capital when you don‘t qualify for traditional financing. But it’s really important to go in with your eyes wide open about the potential downsides. Here are some of the main ones:

• High interest rates – Some MCA companies charge the equivalent of 60-200% APR or more once you calculate the total interest paid over the term of the agreement. That’s crazy high!
• Daily/weekly payments – Having payments automatically withdrawn daily or weekly can drain your cash flow and make it tough to cover operating expenses.
• No early repayment – Most MCA contracts don’t allow you to repay the balance early without huge penalties. You’re locked in once signed.
• Personal guarantees – Often the MCA will require a personal guarantee from the business owner, meaning your personal assets are on the hook if the business defaults. Not good.
• Confession of judgement – Many MCA contracts contain a confession of judgement clause that allows the lender to seize your bank accounts and assets without notice if they claim you defaulted! More on this below…

As you can see, you’re taking on a lot of risk here for that quick access to capital. Make sure you understand the full terms and do the math on the true cost of borrowing.

The Confession of Judgement Trap

One of the most alarming parts of many MCA contracts is the confession of judgement (COJ) clause. This says you admit liability and the lender can get a judgement against you if they claim you defaulted.Here’s what happens:

• The MCA company says you missed a payment
• They file the COJ document you signed with the court
• The court enters a judgement against your business without notice or a hearing
• The MCA company can now legally seize your bank accounts and assets!

This is why it’s so critical to have an experienced Jacksonville MCA attorney review any MCA agreement BEFORE you sign. They can help flag any concerning clauses like a COJ and negotiate better terms on your behalf.Some states like New York and New Jersey have banned COJs in MCA contracts. But Florida still allows them, so you need to be extra careful. Don‘t get tricked into signing something you don’t fully understand!

Finding a Reputable MCA Company

If you‘ve weighed the pros and cons and decided an MCA does make sense for your business right now, it’s crucial that you find a reputable company to work with. Here are some tips:

• Check their BBB rating – Look for A+ rated companies with a solid reputation.
• Ask about their rates – Get specifics on the fee structure, including the buy rate and daily repayment percentage.
• Read reviews – Search online for client reviews and feedback about their experiences. Beware of predatory lenders.
• Compare options – Talk to multiple companies and compare offers. Don’t go with the first one you see advertised.
• Get legal help – Have a lawyer review the full contract before signing anything.

Doing your homework here is important to avoid getting trapped with a predatory MCA company. Take your time and vet them thoroughly.

Partnering With a Jacksonville MCA Attorney

Even when working with a reputable company, having legal guidance throughout the MCA process is essential. An experienced Jacksonville MCA attorney can help you:

• Negotiate better terms – They can negotiate lower rates, flexible repayment options, and avoid any hidden fees.
• Review the contract – They’ll flag any concerning clauses like COJs and make sure you understand all terms.
• Answer your questions – You can ask them anything about the agreement and they’ll explain it clearly.
• Defend your rights – If any disputes arise or the lender acts deceptively, they can protect your interests.

Basically, having a knowledgeable attorney in your corner levels the playing field and gives you peace of mind. I’d highly recommend connecting with one before you enter into any MCA agreement.