202606.17
0

IS YOUR MCA COSTING YOU TOO MUCH? Before you keep paying daily withdrawals, make sure your agreement is really what it claims to be

in 1) Business Law, 2) Employment Law

Many business owners sign merchant cash advance agreements (MCAs) because they need money fast. The problem is that these deals can be expensive, sometimes much more expensive than what they first appear to be. What looks like quick funding can turn into a costly obligation that continuously drains the business every day.

If your company is making daily payments, getting hit with fees, or feels stuck in a cycle where the balance never seems to go down, your agreement may deserve a close legal review. Some MCA contracts are structured in a way that makes them look like purchases of receivables, but in reality, they function more like high-interest loans.

That matters because New York courts look at what the deal really does, not just what the paperwork says. If the funder is not truly taking the risk that your sales could drop, or if the agreement forces repayment no matter what happens in the business, it may be challenged as an illegal loan in disguise.

Common warning signs include:

  • Daily debits stay fixed even when revenues drop.
  • Contract terms are confusing or one-sided.
  • Reconciliation provisions that sound helpful, but do not actually reduce payments if revenue decreases.
  • Personal guarantees or other harsh collection tools are included.
  • A repayment structure that seems designed to guarantee repayment regardless of what happens in the business.

If that sounds familiar, your business may be overpaying for money that was supposed to help it grow. A legal review can help determine whether the agreement is unfair, whether repayment may be challenged and whether there may be a path to reduce or eliminate an excessive obligation.

Schwartz Ettenger helps business owners review merchant cash advance agreements and evaluate whether the deal may be unenforceable or otherwise vulnerable under New York law. If you think your business is paying too much for funding, contact our office to have the agreement reviewed before you pay more than you should.