Vermont Merchant Cash Advance Attorney

How Merchant Cash Advances Work

A merchant cash advance is a form of financing where a company purchases a percentage of a business’s future credit card sales in exchange for an upfront lump sum payment. Here’s how it works:

• A business applies to a merchant cash advance company and is approved for a specific amount, often between $5,000 – $500,000.
• The merchant cash advance company purchases a percentage of the business’s future credit card sales, usually between 8-15%, until the advance is repaid in full plus fees and interest.
• The business receives the lump sum payment up front to use as working capital.
• The business repays the advance by allowing the merchant cash advance company to collect the agreed upon percentage of daily credit card sales via split payments or ACH withdrawals.
• Repayment terms are usually 4-12 months, with payments taken daily until the balance is repaid in full.

Unlike a loan, merchant cash advances do not have a fixed monthly repayment schedule. The daily repayment rate varies based on credit card sales volume.

Working with a Vermont Merchant Cash Advance Attorney

If your business is struggling to keep up with merchant cash advance payments, working with an attorney experienced in MCA debt relief may help negotiate a settlement. An attorney can:

• Review your MCA contract and identify any unlawful provisions under Vermont law.
• Send a demand letter requesting better repayment terms or settlement offer.
• Negotiate with the MCA company to reduce the balance owed.
• Help refinance into an affordable payment program.
• In extreme cases, assist with bankruptcy or debt restructuring.
• Defend against lawsuits and collection efforts.
• Explore defenses such as usury violations or deceptive trade practices.

When negotiating with a merchant cash advance company, an experienced attorney levels the playing field and can often achieve favorable settlements. While each case is different, many MCA companies are open to negotiating discounted payoffs or revised payment plans for struggling businesses.

Key Vermont Laws Governing Merchant Cash Advances

There are several Vermont laws and regulations that apply to merchant cash advances:

• Vermont’s usury limit – Under 9 V.S.A. § 41a, Vermont caps interest rates at 12% for loans under $500,000. MCA rates often exceed this limit.
• Vermont Consumer Protection Act – Prohibits unfair and deceptive business practices. Can be used to challenge predatory MCA tactics.
• Vermont’s UCC Article 9 – Governs secured transactions like merchant cash advances. Determines lien priority and enforcement rights.
• FTC Holder Rule – Federal law that preserves consumer defenses against MCA purchasers. Can be used to invalidate illegal MCA contracts.
• Vermont’s Rent-to-Own Statute – Requires certain disclosures and limits fees for rent-to-own transactions. May apply to some MCA agreements.

Alternatives to High-Cost Merchant Cash Advances

If your Vermont business needs funding but wants to avoid the risks of a merchant cash advance, some alternatives to consider include:

• SBA loans – Government-backed small business loans with low fixed rates.
• Business lines of credit – Revolving credit accounts with interest charged only on what’s used.
• Invoice factoring – Selling unpaid invoices to a factoring company for immediate cash.
• Equipment financing – Loans using owned equipment as collateral.
• 401(k) business financing – Use personal retirement funds and repay yourself over 5 years.
• Friends and family loans – Borrow from people you know using simple loan agreements.
• Business credit cards – Charge expenses and pay over time with 0% intro APR offers.
• Crowdfunding – Raise small amounts from customers or supporters.