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Our firm has over 28 years' experience!
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  • 954-942-2414
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  • 1318 Southeast 1st Avenue, Fort Lauderdale 33316
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About Us

At the Law Offices of Anthony Rumore, P.A. We are client and solution oriented, not problem oriented. We focus on resolving the legal matters and problems of every one of our clients. For us, sharing the precise nature of the legal issues with the client is just the beginning of the problem resolution process. We are determined to present our clients concrete and realistic solutions for their problems.

Contact Info

  • 1318 Southeast 1st Avenue, Fort Lauderdale 33316
  • 954-942-2414

Merchant Cash Advance & Commercial Debt Matters

Merchant Cash Advance & Commercial Debt Matters

The Law Offices of Anthony Rumore, P.A., and its attorneys have been practicing in the creditor-debtor area of the law for a great many years. Collectively, our core team of lawyers possesses more than 50 years of experience in this area of law.

Possibly, you have obtained and cannot repay an alternative financing product commonly referred to as a Merchant Cash Advance. Unfortunately, many of our clients enter contractual arrangements with one or more Merchant Cash Advance lenders with the expectation that the lenders will provide short-term factoring receivable funding to assist our clients in meeting the financial needs of their businesses between the intervals of their customers' regular pay cycles.

However, Merchant Cash Advances (MCAs) are not traditional factoring; instead, they are considered a “purchase of future receivables.” If calculated as traditional loans, some merchant cash advances carry interest rates as high as 200% or more.

How MCAs Work

With a typical MCA, the lender advances funds in exchange for a share of your future sales, repaid on a daily or weekly schedule. Most MCA lenders draw a fixed amount whether business is strong or slow. To qualify, a lender generally reviews your bank and credit card processing statements to decide how much to advance. Once approved, the funds are deposited into your account, and repayment begins almost immediately.

How an MCA Differs from a Loan

An MCA is not technically a loan. It is structured as a purchase of your business’s future receivables, which usually means no collateral and a fast approval that is not driven by your credit. Instead of interest, the total owed is set by a “factor rate,” a multiplier based on your revenue and risk profile. Lenders set that rate by reviewing your monthly deposits, the gaps between deposits, how long you have been in business, your industry, and how many other advances you already carry. The higher the perceived risk, the higher the rate. Because these agreements are framed as advances rather than loans, they fall outside the Usury laws in most jurisdictions.

UCC 9-406 – Effective Collection Tool against Certain Borrowers

Under the Uniform Commercial Code, Section 9-406, the MCA creditors may send UCC Lien Demand Letters to a business owner’s customers, vendors, brokers, insurance payors, and credit card processors or electronic payment application services. A typical example is where a business has a customer that owes the business, say, $20,000 on an open invoice, but that customer has received a lien demand notice from an MCA creditor that states essentially, XYZ MCA has lien rights against receivables owed the business, and you must pay that money to the MCA creditor, instead of paying it to the business owner.

When this happens, it can result in the customer paying the invoice amount to the creditor and can also permanently damage the relationship between the business and its customer. At best, it destabilizes the relationship because the customer has received what appears to be formal legal notice indicating that the business has serious financial problems. Even if the customer who received the notice chooses to disregard the demand to pay the open invoice to the MCA creditor, that customer may decide the risk is too great to continue working with a financially distressed business.

Regarding credit card processing accounts or third-party financial applications, like PayPal, Venmo, or CashApp, if those processing companies or alternative financial services companies receive a lien demand notice from an MCA creditor, they will freeze the account, no questions asked and with no due diligence done to assess the validity of the MCA creditor’s lien demand notice.

Consider the example of owning a restaurant or retail store where credit card or debit card processing is most of the revenue. If the business cannot run credit or debit cards for payment, the business is effectively shut down. There is a solution for this. Our law firm can guide our clients safely through this situation so they can continue operating their businesses with full credit card/debit card payment processing capabilities.

Defending a Merchant Cash Advance Lawsuit

Did you get sued by a Merchant Cash Advance creditor? Facing it alone can risk the loss of your business. These cases are very different from ordinary debt matters and must be handled accordingly. Once suit is filed, our firm, with an affiliated attorney admitted in your jurisdiction where applicable, responds to the complaint. In many cases, we can file a motion to dismiss that challenges the validity of the debt and the creditor’s paperwork.

MCA creditors’ paperwork is often poorly drafted and may contain provisions that are inapplicable or unenforceable, and that works in your favor. In some cases, we can show that the “advance” is in fact a disguised, usurious loan rather than a genuine purchase of future receivables. A judicial finding that the MCA is really a loan can significantly strengthen your defense by exposing its illegality under the usury laws.

Our attorneys bring more than 50 years of combined experience defending, negotiating, and settling problem debts of every type, including business debt and merchant cash advances. Regain control of your cash flow before your debt problems grow worse.

How Our Firm Can Help

The Law Offices of Anthony Rumore, P.A., is well qualified to address your business debt and merchant cash advances. We handle debt matters of every kind, including the restructuring, mitigation, reduction, and favorable resolution of MCA debt accounts.

We will work with your lenders to reduce your payments, arrange forbearance where possible, and settle balances for less than what you owe. We can also help protect your assets from creditors and reduce the risk of levied assets or frozen accounts. Our goal is very straightforward: to get you free of these obligations as quickly as possible and back in control of your business and its cash flow.

Call 954-942-2414 for a free, no-obligation consultation today.