San Jose Merchant Cash Advance Attorney
Contents
San Jose Merchant Cash Advance Attorney: Your Guide to MCA Loans and Legal Help
Merchant cash advances (MCAs) have become an increasingly popular form of financing for small businesses and merchants in San Jose and across California. But these advances come with risks – if you fall behind on payments, MCA lenders can hit your business with lawsuits and try to seize assets.That’s why it’s so important to understand your rights and options if you have merchant cash advance debt. This article provides an overview of MCA loans, common legal issues businesses face, and how an experienced San Jose merchant cash advance attorney can help protect your interests.
What is a Merchant Cash Advance?
A merchant cash advance provides a business with a lump sum of capital in exchange for a percentage of future credit card and debit card sales. It is not technically considered a loan under California law.With an MCA, the business does not make fixed monthly payments like a typical loan. Instead, the lender takes a set percentage of daily or weekly credit card receipts until the advance is repaid in full, plus fees and interest that can equate to an Annual Percentage Rate (APR) of 60-300% .
Pros of MCAs:
- Fast approval and funding, often within a few days
- Fewer eligibility requirements than bank loans
- No collateral required
- Payments adjust based on sales volume
Cons of MCAs:
- Extremely high APRs equivalent to payday lending rates
- Daily/weekly payments strain cash flow
- Hard to pay off for slow revenue periods
- Personal guarantees often required
- Default can trigger lawsuits and asset seizures
Common Legal Issues with Merchant Cash Advances
While MCAs provide easy access to capital, they also come with major risks for the borrowing business. Some common legal issues include:
Lawsuits for Default
If you fall behind on payments, the MCA lender can sue your business for breach of contract. Many lenders will try to get a default judgment against you, allowing them to seize assets or garnish bank accounts. Fighting an MCA lawsuit takes legal help.
Confessions of Judgement
Many MCA contracts require you to sign a confession of judgement upfront. This gives the lender a shortcut to getting a judgement if you default, without having to prove their case in court.
Asset Seizure & Wage Garnishment
Defaulting on an MCA can result in the lender seizing your business assets and accounts or garnishing your personal wages if you signed a personal guarantee. An attorney can help protect your assets.
Harassment from Collectors
MCA lenders and collectors frequently use aggressive tactics like nonstop calls and threats of legal action. Under the Fair Debt Collection Practices Act, you have rights against harassment.
Violation of State Laws
Some MCA lender practices violate state laws on lending disclosures, interest rate caps, and collection practices. An attorney can identify potential violations.
How a San Jose Merchant Cash Advance Attorney Can Help
If you’re facing legal action from an MCA lender or simply struggling to make daily payments, a knowledgeable merchant cash advance attorney can be invaluable in protecting your interests. Here are some key ways we can help:
- Negotiating Settlements – We can negotiate with lenders to settle your outstanding MCA debt for less than you owe. Often we can get lawsuits dropped as part of a settlement.
- Defending Against Lawsuits – If you get sued for nonpayment, we will defend you in court and fight back against confessions of judgement and default judgements.
- Halting Harassment – If lenders are harassing you illegally, we send cease and desist letters and take legal action to stop the harassment.
- Restructuring Payments – If the repayment schedule is straining your cash flow, we can try to negotiate altered payment terms.
- Asserting Your Rights – We identify potential violations of state and federal debt collection laws and use those to leverage settlements or get cases dismissed.
- Recovering Seized Assets – If a lender has seized your business assets or personal property, we can fight to recover those assets.
- Improving Cash Flow – We can provide overall advice to improve your cash flow so you can get out of MCA debt and avoid it in the future.
Beware MCA Loan Consolidation Offers
If you receive offers to “consolidate” multiple merchant cash advances into a single loan, use extreme caution. These offers often come from affiliates of the original lenders, who charge big fees and keep you trapped in expensive debt. An attorney can advise if consolidation makes sense for your situation.