5 Things to Check in a Reliant Funding Agreement Before You Sign

Before you sign a Reliant Funding agreement, check five things: the total cost, how payments come out of your account, whether the deal has an end date, what you put up as security, and what counts as default. To get that information, you’ll need to understand the fine print in your merchant cash advance agreement. An MCA is not a loan. The funder is not lending you money. Instead, it is purchasing your future receivables, at least on paper. Like many MCAs, Reliant purchases your receivables at a discount. In other words, you get less money than the total you are obligated to pay back.

1. Know the real cost

The factor rate is how much you repay for every dollar that you’re advanced. You’ll pay at least twenty percent above the face value of the funding amount, as factor rates reportedly start at 1.20. In at least one lender review, there was an added $495 origination fee. Then there is the question of the APR. If you borrowed $100,000 at a 1.35 factor rate for six months, the total cost would be $135,000. That amounts to an APR of around 70%. Take a merchant cash advance from Reliant Funding over a shorter term, and watch the APR shoot up. Four months with a 1.40 factor rate equals around a 120% APR. If you have an accountant, ask them to work it out.

2. See how payments come out

Repayments are daily or weekly. They come out automatically, via ACH (direct payment). The most important thing to watch is whether each debit is a percentage or not. For MCAs, the percentage usually tops out at around 20%. If a fixed dollar amount is taken from your account, no matter how many sales you made that day, the funder is making a loan, not a cash advance, and the numbers work differently.

How about asking for a lower payment if sales tank? Many MCAs have something called a reconciliation clause. You can ask to have your daily debit reviewed. However, many reconciliation clauses are meaningless. Imagine a clause that needs months of bank statements within 3 days. It is pretty much useless. If the clause is based solely on what the funder decides, there is little reason to have it.

3. Look for an end date

Does your Reliant Funding merchant cash advance have a termination date? In other words, is there a final date that you could be legally expected to have paid off all of your obligations under the contract? If so, that is more like a loan, not a cash advance. Without that date, you could have a very long obligation.

There is a reason it matters. A 2020 New York appeals court had set out how courts usually decide if an MCA is really a loan. It boiled down to three factors. Can payments be adjusted down if sales fall? Is there an end date when you are supposed to have paid the total you owe? And third, does the funder still get paid if you file bankruptcy? The question of if it is a loan can matter in other ways. That is because under New York law, criminal usury law caps rates at 25% APR. If the funder is a lender in a court’s eyes, any rate above that voids the entire contract.

If you pay early, does the amount you owe go down? It might. MCAs usually require you to pay the full amount no matter when you pay off the obligation, but Reliant reportedly offers a discount for prepayment, so check the exact wording. Read the term sheet carefully and ask for it to be in writing before you agree.

4. See what you put up

Don’t be surprised when the funder wants to take a blanket security interest in all business property, such as equipment and inventory, and file a UCC-1 statement. Beware, as it stays effective for five years unless continued. The blanket UCC filing is one clue that this is a lender in disguise.

Then check for a personal guarantee, which lets the funder go after your personal assets, bank accounts and property. The wording can matter a lot. Some only apply to promises you made in the contract, not the full amount of the agreement. Ask the funder to explain exactly what it covers.

5. Check default and court terms

Do you know what will trigger an event of default? It is often a long list, and not all the points relate to missed payments. Some MCAs include taking other financing, any “adverse changes” to your business, and even getting legal advice. Such triggers show that the funder cares about credit risk, like a lender.

The most dangerous part of a merchant cash advance agreement might be a confession of judgment. If included, it lets the funder take out a judgment against you with no lawsuit, no hearing, no notice and no chance to defend yourself. Check for a section or affidavit headed confession of judgment or look for the phrases warrant of attorney or confess judgment. State law limits these confessions in several ways. A 2019 New York law said a confession can be filed only in a county where you lived or had a place of business. Texas HB 700 bars sales-based funders from filing one starting from September 2025.

Another thing to check is whether your contract is with Reliant or another company. LCF Group of New York reportedly bought some of the assets and licensing rights of Reliant in 2023. Also look at which law governs, and which courts hear disputes. Most MCAs pick New York law and courts. Also check for a waiver of a jury trial. In effect, that means no jury would ever decide a dispute, only a judge. Watch out for phrases like waive jury trial, or waive trial by jury, and read all the fine print.

Go through those five checks and write down what you find. Each flaw in the contract is also a bargaining chip if you have to deal with your funder later on. A funder facing contract flaws is also less likely to go to court if you push back when you get in trouble.

A free contract review costs nothing and takes a day or two. Call (888) 837-7053, or send the agreements to Delancey Street for a straight read on your options.