Negotiating MCA debt down in Montana2026 rankings, and the rate ceiling that still applies here

Negotiating a merchant cash advance in Montana: the rate ceiling nobody told you still exists, and what it is worth at the table

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Almost every MCA guide on the internet was written for New York, and the New York move is the 25 percent criminal usury line. Montana does not have that line. Put it down. What Montana has instead is better for a negotiation and worse understood: a civil interest ceiling that still reaches commercial credit, with no corporate exemption and no dollar floor written into it.

The Montana advance averages about $29,000 and closes near 50 cents on the dollar, roughly seven months out. The difference between closing at 50 and closing at 65 is usually not persistence. It is whether the funder believes a live statutory claim is sitting in the file, and whether the person holding the file can actually bring it.

Montana still has a rate ceiling, and it reaches your advance

Mont. Code Ann. § 31-1-107(1) lets parties agree in writing to any rate not exceeding the greater of 15 percent, or an amount 6 percentage points per year above the prime rate published by the Federal Reserve System in statistical release H.15, dated three business days before the agreement was executed.

Now read what is missing from that sentence. No corporate exemption. No business purpose exemption. No dollar floor. No entity test. Compare Alabama, which exempts every advance of $2,000 or more and forbids the borrower and any guarantor from pleading usury at all. Compare New Mexico, which shuts the door on any business entity debtor and names the guarantor. Montana wrote none of it.

The chapter has exactly two exemptions. Section 31-1-112(1) covers regulated lenders, and § 31-1-111 defines those as banks, credit unions, trust companies, consumer loan licensees, deferred deposit licensees, mortgage licensees and their subsidiaries. A merchant cash advance funder is on none of those lists. The Division of Banking and Financial Institutions does not license commercial financing at all, which is exactly why the funder is not on them.

What a violation is worth, and the two dates that void it

Section 31-1-108 is the number that changes a negotiation. Charging over the line forfeits double the amount of interest the instrument carries. If you have already paid it, you recover double what you paid.

Two conditions sit in the same sentence and each one is fatal if missed. You must make written demand for the return of the interest before you file anything. And the action must be brought within two years after the payment of the interest, not two years from signing and not two years from default.

Calendar both on the day you open the file. Write the demand, date it, send it in a form you can prove, and keep the copy. That letter is not a formality. It is the precondition to a claim whose damages are measured in multiples, and a funder's counsel reading a properly served demand is reading a different file than one reading a hardship letter.

The money held back at closing counts toward the rate

This is where Montana quietly does the work for you. Section 31-1-104 defines interest to include loan origination fees, points, and prepaid finance charges as defined in 12 CFR 226.2.

Look at what actually funded. The agreement says $29,000. The wire said less, because an origination fee, an underwriting fee, an ACH setup fee and a broker's cut came out first. Under § 31-1-104 that withheld money is not a separate service charge sitting outside the rate analysis. It goes into the numerator while the smaller amount you received goes into the denominator, and both moves push the calculated rate up.

So the first arithmetic in a Montana negotiation is not the payback multiple. It is the net amount that hit the account, the total repaid, and the term. Pull the funding wire, not the term sheet.

The two defenses the funder will raise, and the answers

Expect both. Neither is a surprise and neither is unanswerable.

1. That it is not a loan of money at all. The funder will say § 31-1-101 governs loans, and a purchase of future receivables is a sale, so no rate analysis ever starts. The answer is in your own paperwork: a fixed daily amount taken regardless of receipts, a reconciliation clause the funder would not honor, and a guarantee that shifts the risk of non payment back to you. A purchaser bears the risk. A lender does not.
2. Section 31-1-112(2). A single sentence added in 1981 exempting a finance operation that finances transactions between merchants, as defined in § 30-2-104. Go read § 30-2-104(3). Between merchants means both parties to the financed transaction are chargeable with the knowledge or skill of merchants. The transactions being financed here are your sales to your customers, and the diners, guests and retail buyers on the other side of those sales are not merchants. Build the record on that point specifically, with the receipts to show who is paying you.

Both answers are evidentiary, which is the reason this page weights attorney involvement the way it does. The argument is only as good as the documents assembled behind it.

There is no criminal usury statute in Montana, and that is fine

New York hands a merchant a 25 percent felony threshold to point at. Montana hands you nothing on the criminal side. A heading sweep of all 54 titles of the Montana Code Annotated returns exactly one section with usury in its name, § 31-1-108, and it is a civil forfeiture statute. No loan sharking act. No extortionate extension of credit offense. Title 45, the criminal code, sets no interest rate anywhere.

That is not a weakness in your position, but it does change the letter you send. Do not threaten a criminal referral, because there is nothing to refer, and a funder's counsel will read the bluff instantly and price your file accordingly.

Keep it civil and keep it specific. A demand that cites § 31-1-107(1) with the H.15 prime figure for the correct date, § 31-1-104 for the withheld fees, and § 31-1-108 for the doubling, is worth more than any threat. It tells the desk that whoever wrote it has read the file.

What all this does to the number on the table

A funder's collections desk prices on recovery, and a live forfeiture claim goes straight into that arithmetic. Doubling runs against them. Litigating it runs through Montana counsel in a Montana forum, 2,000 miles from where the file is managed. Both of those are costs incurred before a dollar comes back.

So the sequence matters. Written demand under § 31-1-108 first, dated. The funding wire and the debit history assembled second. Only then the settlement conversation, opened with a number rather than a story.

Files worked this way in Montana tend to close near 50 cents on the dollar, in about seven months. Files worked as a hardship request close higher and slower. The paperwork is the leverage, and there is more of it available here than in most states.