Frustratingly, the new California law turns over the duty to provide specific guidance and to create regulationsgoverning the disclosure requirements to the California Commissioner of Business Oversight (known as the DBO). This information is not intended to create, and receipt of viewing does not constitute, an attorney client relationship. What is a reconciliation? Since MCAs come unsecured, you will not have to give collateral to access them. The MCA company decides how high the factor rate will be based on reviewing bank statements which will show the number of monthly deposits, how much those deposits were for, how many days they did not receive any deposits and how many other advances the merchant has. We offer quick assistance to you. In Clark v. Advance Me Incorporated., case number 2:08-CV-03540, Advance Me paid $11.5M to settle the allegations and agreed to implement measures to protect merchants when their receivables fell short for legitimate reasons. Unable to get working capital to fund a summer marketing campaign, she wondered whether she could borrow against future credit card sales derived from parents bringing their kids back for fall classes. Yes, Grant Phillips Law has successfully negotiated settlements with most of the Merchant Cash Advance funders existing throughout the United States. Once you receive it, you can also start paying the MCA company. How Fast Can I Be Approved for an MCA in California? 10 years and counting. A merchant cash advance (MCA) is a business financing option where you typically get a lump sum of money in exchange for a percentage of your future debit or credit card sales or income. Often, business owners may get in over their heads with these types of loans and may require the assistance of a Merchant Cash Advance experienced lawyer to help them in regaining day to day control of their business enterprise. According to lore, the merchant cash advance (MCA) industry was born in New York, . A covered commercial financing transaction is an accounts receivable purchase transaction, including factoring, asset-based lending transaction, commercial loan, commercial open-end credit plan, or lease financing transaction. Johnson was running four Gymboree Playgroup & Music franchises. Global Legal Law Firm doesnt just talk a big game, we actually deliver. If your business is struggling with repaying a merchant cash advance, if you are at risk of defaulting, or have already defaulted then you should strongly consider consulting with an attorney experienced with mca lawsuits. Send Grant Phillips Law your Merchant Cash Advance contract for a free legal review and analysis for compliance with California law. The payments and interest may become too high for you to handle on your own. You may be asked for your business tax ID, Social Security number and general information about your business. The problem with most conventional financing options is that they take time and have strict measures. The law requires the Merchant borrower to sign the Cost Disclosure Statement. Please note: if you do not see your specific funder listed, it is still very likely that we have negotiated and settled a Merchant Cash Advance loan with them but they are not listed here because this list is only a sampling of Merchant Cash Advance funders we have worked with: If you are a California resident or have a California business and have taken out an MCA position with an MCA funder, whether the funder is based in California or anywhere across the entire United States, contact the law firm of Grant Phillips Law, PLLC. Your payback amount will always be determined by the factor rate set by the MCA provider. The experienced and compassionate lawyers at Grant Phillips Law can help you evaluate your Merchant Cash Advance contract for strict compliance with the new California Law. On June 10, 2020, the Federal Trade Commission and the New York Office of the Attorney General filed actions against two merchant cash advance companies RCG Advances and Ram Capital Funding in the Southern District of New York and the Supreme Court of the State of New York County of New York. *Images used are not employees of the law firm*, settle your merchant cash advance loans for less than what you owe. However, the law does not require a funder to confirm the funds were in fact used for an actual commercial purpose. Grant Phillips Law has a dynamic team of lawyers with the necessary knowledge, experience and expertise to help you get out from burdening Merchant Cash Advance positions. Your business can receive an MCA provided that you share a percentage of your debit card and credit card sales with the MCA provider. Many people think that the aftermath of the financial crisis in 2008 is when merchant cash advances came to rise, but that is incorrect. The CFL applies to both consumer and commercial lenders, requiring licensing and disclosure as well as interest and fee caps on some loans. It is a lump sum of money that you can use toward future sales. Are you a California resident? 1. MCAs have been known to carry annual percentage rates the total cost of a loan, including all fees sometimes over 300%. Our law firm has settled Merchant Cash Advance loans with virtually every funder, big to small, located in California or in a different State, large loan balances to small payoff amounts and everything in between, Grant Phillips law has seen it and settled it. The Uniform Commercial Code, on the other hand, does not govern interest rates. These exorbitant fees can cause serious cash flow issues for merchants. We offer a free no obligation review of your deal and your Merchant Cash Advance contract. In many cases, debts rise to a level of criminal usury. Contact us today with any legal questions regarding alternative finance! Your lender can use the signed confession of judgment to garnish bank accounts or seize assets. Before you have any bank accounts frozen or garnished, UCC liens filed against merchant processors/vendors, or you have a lengthy lawsuit filed against you that you would have to spend countless hours and money on, call us today for a complimentary consultation with an experienced business debt attorney. Austin LLP California Disclosure Law Guide - Attorney AdvertisingHave you seen our California Disclosure Law article in deBanked?https://debanked.com/2022/12. Meanwhile, New Yorks legislature had also proposed a near-identical bill, but it did not pass. With over 60 years combined experience we are well prepared to handle your case. portalId: "20208004", As a result, various New York state courts have looked into the question of merchant cash advance agreements and whether they are loans or sales of future receivables. Along with similar claims and allegations advanced by the FTC, the New York AG contends that defendants disguise each loan as a Purchase and Sale of Future Receivables, but in reality, the transactions are loans.. However, the Uniform Commercial Code does not regulate interest rates. Renegotiation is a proven way out of an MCA. Her Patented technology allowingfor the splitting of credit card sales was a major step in the birth and growth of the MCA world. This is considered a Merchant Cash Advance. Unfortunately, very few protections, if any, exist for people who take out one of these advances, though there have been some recently proposed legislation on the state and federal level that may soon change this lack. Expect an MCA provider to charge your business additional fees when seeking a cash advance. The attorneys at Grant Phillips Law, PLLC have seen cases where the effective APR on a Merchant Cash Advance was in excess of 1,200%. Does Merchant Cash Advance Regulation Exist? You may be surprised to learn of your extremely high actual interest rate, costs and fees. Merchant Cash Advance Regulation. Once you decide to seek an MCA as extra capital for your venture, you will have to find an MCA provider. The law is provided under Division 9 of the Financial Code. Skip to content. Further, in the case of merchant cash advance arrangements where a small business is required to submit a daily fixed amount, the small business typically has a right to reconcile their daily fixed payments to the businesss actual income with the effect that the small businesss daily payments would be reduced if the revenue of the small business has fallen. You may expect to receive more phone calls from brokers trying to get you to take out more advances. These lawsuits pose a threat to the MCA industry, and provide insight into the types of claims state and federal regulators will bring against MCA companies in the future. It will also remain the same whether you choose to pay the MCA back in two months or a year. Unlike interest rates, which change as your debt reduces, factor rates are only imposed on the original cash advance amount. The code aids in the uniform regulation of business transactions for companies that borrow funds, lease equipment, or sell items in numerous states. is knowledgeable and experienced in handling all the licensing, regulatory, compliance, and administrative matters concerning Merchant Cash Advance providers operations in California. Fraud, for instance, is actionable. Moreover, you have the choice of using the option as your requirements. A collection agent may have reached out to you, to demand that you pay the full balance of the alleged debt. By negotiating new terms with the creditors, our company might be able to assist the company in creating a strategy to manage its debt. Did you receive a merchant cash advance breach of contract lawsuit? If you have a merchant cash agreement and the situation with your business profits has changed, contact our attorneys to help negotiate on your behalf! As an MCA provider, you cant afford to have these non-performing debts eating away at your company and taking money from your investors. Overall, this is a financing option that many businesses will take advantage of if they dont have a great credit score to get other types of financing from traditional banks. Too often this thinking ends up making things worse for your business, with frozen business accounts, debt, liens, lawsuits and judgments. Merchant Cash Advance Attorney California Here for you and your business. Many would claim these advances to fall under the definition of predatory lending. A majority of MCA contracts require New York law as the choice of law for any dispute. MCA providers have attractive eligibility standards, which make it easy for most small enterprises to qualify. 1.1 Reconcile My MCA: Merchant Cash Agreement Attorney; 1.2 Merchant Cash Advance - The Lane Law Firm; 2 MCA Industry Attorneys | deBanked. Simplicity, faster access, and convenience are the three attributes used to describe the value of merchant cash advances. The provider will rely on this documentation to verify whether your annual credit card receipts indicate an adequate cash flow. Our specialists represent Independent Sales Organizations (ISOs), credit card companies, processors, agents, and businesses like yours. In time, many feel that the CFL will require Merchant Cash Advance funders to be licensed. Both the FTC and the New York AG assert several claims against the defendants related to the marketing, offering, and collecting of MCA. Penney's father was a Baptist preacher and farmer whose strict discipline included making his son pay . There is never a cost to speak with us and all attorney consultations are always complimentary. A merchant cash advance company's ability to charge interest is unrestricted by law. Your Merchant Cash Advance Attorneys California to preserve your legal rights, enforce those rights and protect you and your business. As accounts receivable acquisition transaction, such as factoring, asset-based lending, commercial loans, commercial open-end credit plans, or lease financing transactions, is a covered commercial finance transaction. Unlike a conventional term loan, you will not incur fines for late payments or be mandated to make payments on time. Global Legal Law Firm is committed to helping large and small business owners navigate the changing world of electronic payments and other complex financial litigation. Though MCA providers do not require a CFL license, they are mandated by the California Disclosure Law to make detailed and specific disclosures about their products. Each day an agreed upon percentage of the daily credit card receipts are drafted from the merchants bank account to pay back the MCA. Depending on the type of MCA you are seeking, the cash advance may take a toll on your cash flow. Alternative Funding Group reviews CA Merchant Cash Advance applications and are subject to approval within 24 to 48 hours depending on the business details, cash advance amount, and other information from the application form. As key players in this industry, the Wide Merchant Group offers convenient, simple and quick financing programs for various business purposes in Los Angeles, California. AdvanceMe was monopolizing the merchant cash advance industry because they owned the patent on split-funding (known today as merchant cash advance). Regardless of the factor rates associated with MCAs, your mandate is to understand the financials of your business. In a process called stacking, other MCA funders may contact you to try to get you to add new advances on top of your existing one in a gambit to get out of debt. NY Office 26 Broadway 3rd Floor New York, NY 10004 Home; About Us; Attorney Profiles; If you're considering a merchant cash advance reverse consolidation, learn how they really work and how your business could be affected first. Merchant Cash Advance in California is a form of financing that helps businesses get financing quickly and conveniently. Because merchant cash advances are not deemed loans, they are not subject to any regulations. California commercial financing disclosures. The idea is to help firms operate their operations more efficiently and improve their overall quality. 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