Business Debt Relief in Los Angeles

A Los Angeles or Orange County owner with merchant cash advance debt can start by laying each contract beside the disclosure form California has required since December 2022, listing every debit, and asking for a free, confidential first conversation. After the 2025 fires, an $18.42 wage floor and a higher October sales tax, the debit can be the one number that never moves while sales do. If that gap wakes you at 2 a.m., this page is for you.

Picture an owner like Daniel, who runs a prop-rental and set-dressing warehouse in Sun Valley with nine employees. Productions are his customers, and Los Angeles shot about 16 percent fewer location days in 2025 than in 2024. In the spring he took two advances: $40,000 repaid at $400 a business day until $56,000 came back, and $60,000 repaid at $600 a business day until $84,000 came back. Those numbers are made up for illustration, but the shape is common enough: $1,000 leaves his account every business day, about $20,000 a month, whether a truck of lamps rented that week or not.

I am Tammy Houston, a senior accounting and debt specialist at Hamilton & Merchant, and on this page I will work through a stack like Daniel's the way an accountant would: define the terms, put the numbers in a row and take one step at a time. Hamilton & Merchant is based in Orlando, Florida, so there is no Los Angeles office and the first conversation happens by phone. Nothing here is legal or tax advice, and Hamilton & Merchant is not a law firm or a CPA firm. Where a step needs a lawyer or a CPA, that should be your own, licensed in California.

How is the economy treating Los Angeles and Orange County owners right now?

The picture is mixed. California's unemployment rate was 5.1 percent in September 2026, with Los Angeles County at 4.5 percent and Orange County at 4.3 percent, so the broad labor market is not in free fall. The strain sits in particular trades, and a fixed debit finds those trades first.

Entertainment is the clearest case. FilmLA's count shows 19,694 shoot days in Los Angeles in 2025 against 23,480 in 2024, and every major category finished at least 30 percent below its five-year average, with television about 50 percent below. The caterers, grip-truck owners, lighting rentals and prop houses that sit behind those shoot days feel that as a thinner calendar, not as a headline.

Ports are the second case, and they point the other way. The Port of Los Angeles handled 10.2 million containers (counted in twenty-foot units) in 2025, down under 1 percent, and the Port of Long Beach set a record at 9.9 million, up 2.4 percent. Shippers front-loaded goods before tariffs took effect. Front-loading pulls cargo forward, and the months after can be quiet: the Port of Los Angeles saw November 2025 volume fall 12 percent, with loaded imports down 11 percent. A customs broker, trucker or importer in Wilmington or Long Beach can face a busy stretch and a thin month inside the same year. The trucking and logistics page covers that side of the trade.

Owners farther east, past the county line, may find the Inland Empire page closer to their own market. Orange County adds scale: about 3.2 million residents, a gross regional product near $348 billion and, in the region's own labor-market deck, 96.4 percent of employers with fewer than 50 employees. Garment makers in the Los Angeles area sit under a separate rule: since January 1, 2022, California's Garment Worker Protection Act has ended piece-rate pay, so workers must be paid at least the minimum wage on an hourly basis. That raises the fixed floor under a shop's costs, which is the number a daily debit has to fit inside.

What does California's commercial financing disclosure law require?

California requires a provider that makes a specific offer of commercial financing of $500,000 or less to give the business a written disclosure, and the business signs it before the deal is finalized. The statute, SB 1235, was signed on September 30, 2018; the Department of Financial Protection and Innovation (DFPI) finished its regulations, and they took effect on December 9, 2022.

The disclosure lists the total amount of funds provided, the total dollar cost of the financing, the term or estimated term, the method, frequency and amount of payments, and the prepayment policy. It also states an estimated annual percentage rate under the DFPI regulations, which I will explain in the next chapter. For an owner, the practical value is simple: the form is a one-page summary written by the provider, so you can hold it against the longer contract.

A court test is behind it. The Small Business Finance Association challenged the regulations, and on April 15, 2025 the Ninth Circuit affirmed the lower court and left the rules in place. If your advance was funded after December 2022 and you cannot find a disclosure page in your paperwork, that is worth noting on your debit sheet. It does not by itself decide anything about your contract; your own attorney decides what, if anything, follows.

For a state-by-state comparison, the state MCA laws study sets California beside every other state with a disclosure law.

How does the estimated APR work on a sales-based advance?

An annual percentage rate, or APR, restates the cost of money as a yearly rate so different offers can be compared. California's rules call an advance repaid as a share of sales "sales-based financing," and they require an estimated APR because nobody knows next year's sales. The estimate can be built two ways.

Under the Historical Method, the provider averages your own past sales over a lookback of four to 12 months. Under the Underwriting Method, the provider uses its own projection. Either way the form should show the average monthly income it assumed. For an advance that is not factoring, the finance charge includes the discount taken on the face value of the receivables, and the rate is computed under federal Regulation Z methods.

Here is the check I would do with a pencil, using made-up numbers. Suppose the form assumes $80,000 a month in sales. Daniel's slow months run closer to $52,000. A rate computed on $80,000 months will not describe what the advance costs in a $52,000 month, because the estimate and the real calendar disagree. That is the reason the form carries its warning.

1. Find the average monthly income on the form and compare it with your bank deposits for the same months.
2. Note the lookback period the provider chose, between four and 12 months.
3. Write the total dollar cost next to the funded amount. The gap between them is the number to understand first.
4. Run your own figures through the MCA cost calculator and compare.

What changed for California offers on January 1, 2026?

Senate Bill 362 took effect January 1, 2026 for offers of $500,000 or less. It says a provider may not use the words "rate" or "interest" in a way that could reasonably mislead the business. Examples include calling a non-annual charge "simple interest," or describing a charge as a "factor rate" or "fee rate" when it differs materially from the APR.

The same bill adds a reminder rule. After a specific offer is made, whenever the provider states a charge, a pricing metric or a financing amount during the application process, it must also state the annual percentage rate, using the words "annual percentage rate" or "APR." If you applied after January 1, 2026 and every quote in the emails mentions only a multiple like 1.3, that is worth saving.

Enforcement runs through two doors. A provider holding a California Financing Law license answers to that law. For others, the DFPI's rules effective October 1, 2023 bar unfair, deceptive or abusive practices in commercial financing, including by merchant cash advance providers. Separately, covered providers file an annual report with the DFPI each March 15 covering the prior calendar year; the first was due in 2025, and the DFPI treats a missed filing as a violation.

A disclosure form can tell you what an offer costs on the day you sign. It cannot tell you what a slow February will do to the debit.

What has the DFPI done about merchant cash advances?

The DFPI has issued a public invitation, requires annual reports and has entered at least one consent order that discusses MCA contract terms. On April 14, 2025 it published an advisory asking small businesses that may have met unfair, deceptive or abusive practices tied to merchant cash advances to say so, and it takes complaints online through its complaint portal. If you were never given a required disclosure, that is the route the DFPI points to.

The enforcement example I can cite from a primary source is the consent order the DFPI entered with Allup Finance LLC on November 12, 2020. The order recites the department's findings. It noted that, as a general rule, California law does not treat a no-recourse purchase of a business's outstanding receivables as lending, and it then looked at where the risk of repayment sat in that company's agreements. It pointed to a default triggered by three insufficient-funds events and an open-ended repayment period. The company neither admitted nor denied the findings, and the order set licensing, refund and cost terms that apply to that company alone.

Please read that carefully for what it is. It is one company's agreed order from 2020. It does not decide how any other contract is treated, and courts look at the actual terms of a given contract. I found no later DFPI order that is specifically about a merchant cash advance, so I will not describe a pattern. The enforcement actions study tracks the public record across agencies.

What does California's new licensing law change, and when?

Governor Newsom signed Assembly Bill 2116 on September 30, 2026 (Chapter 823, Statutes of 2026). It expands the California Financing Law to cover small business commercial financing of $500,000 or less and expressly brings merchant cash advances, factoring and other accounts receivable purchases inside it. The dates matter: most provisions become operative January 1, 2028, and the licensing prohibition becomes operative July 1, 2028. Nothing in it is in force today.

Three pieces stand out for an owner. Providers and brokers may not take a confession of judgment or a power of attorney before a recipient defaults. A transaction found unconscionable under Civil Code section 1670.5 is treated as a violation of the Financing Law. And the DFPI may suspend or revoke a license when a provider repeatedly fails to consider a recipient's ability to repay. A "small business" under the bill is a for-profit entity with annual gross receipts up to the greater of $16 million or a figure the Department of General Services adjusts.

Open questions remain for contracts signed in the first half of 2028, and the DFPI is not required to write regulations. I would not read a 2028 start date as a statement about contracts you hold now. Your own attorney is the person to ask. For where this sits among other 2027 and 2028 changes, see the guide to merchant cash advance laws.

Where could a funder sue a Los Angeles business?

A funder could sue in a California superior court, or in the court a contract names, and some contracts name another state, often New York. The venue and governing-law clauses are usually near the end of the agreement. Find them first, write them on the debit sheet and show them to a California attorney.

California sorts civil cases by amount. A limited civil case is for $35,000 or less and an unlimited civil case is over $35,000. Small claims courts hear up to $12,500 when an individual sues and up to $6,250 when a business entity sues. Daniel's two advances, at $56,000 and $84,000 to repay, would each sit in the unlimited track if a funder sued for the full balance. A suit over a single missed week might be smaller, which is why the amount demanded on the summons is worth reading closely.

Two California rules shape the rest. Since January 1, 2023, Code of Civil Procedure section 1132 says a judgment by confession is unenforceable and may not be entered in any superior court, with an exception for confessions obtained or entered earlier; the San Diego page covers that ban in depth. For a judgment from another state, a creditor can ask a California superior court to enter a California judgment through a sworn application with an authenticated copy. The out-of-state judgment guide explains what to check, and the lawsuit guide covers what a summons means and why a response deadline cannot be ignored.

How does a bank levy work in California?

A levy is a tool for enforcing a court judgment, which is why a lawsuit and a judgment come first. California's rules on how a creditor reaches a business account, and what the state's exemptions say, are the subject of the San Francisco Bay Area page, and I would rather send you there than repeat it badly. If a statement shows your account frozen, the frozen account guide has a checklist. Describing the law is not a promise that any money is protected; your own attorney decides how it applies to you.

What did the January 2025 fires do to businesses with daily debits?

The Eaton and Palisades fires cut off sales for businesses in the burn areas and in the evacuation zones, but a debit schedule agreed months earlier does not know about an evacuation order. The Los Angeles County Economic Development Corporation counted 1,863 businesses inside the burn areas, employing about 9,600 people and generating $1.4 billion a year. More than 16,000 structures were destroyed, including about 200 commercial ones.

Those evacuation-zone owners are the ones people forget. Their buildings sat outside the burn footprint, so the loss came from closed doors rather than a destroyed storefront. The same economists put 2025 output losses for those businesses at $625 million in a short-disruption case and $1.2 billion in a long one. For the burn areas, five-year output losses run from $4.6 billion to $8.9 billion, with full recovery possible by 2028 at best or not until 2034 at worst.

Here is a small illustration with invented figures. A bakery in an evacuation zone closes for ten business days and has a $500 daily debit. During the closure $5,000 leaves the account while nothing comes in. Whether the contract adjusts a payment when sales fall, and how an owner asks, is set by that contract's own words. The reconciliation guide explains the term and what to look for.

I grew up in a California Navy family, and one habit that gave me is writing the dates down before a bad week arrives instead of after. For a fire year that means the day the doors closed, the day they reopened, and the amount debited in between.

What disaster help existed, and what has ended?

Three kinds of help were offered after the fires, and the dates have mostly passed. The IRS announced on January 10, 2025 that taxpayers with a business in Los Angeles County had until October 15, 2025 to file and pay various returns, including quarterly payroll and excise tax returns due January 31, April 30 and July 31, 2025. That window has closed.

The SBA offered physical disaster loans and Economic Injury Disaster Loans. By its June 16, 2026 announcement it had approved nearly 13,000 applications for more than $3.4 billion for Los Angeles City and County, and borrowers had until June 30, 2026 to accept approved loans. After that date undisbursed assistance is available only on a case-by-case basis. If you applied and never accepted, the SBA's loan portal and the SBDC listed later in this page are where to ask.

One planning point: a government loan is a new payment on top of existing debits, and each repayment adds to the daily cash you need before payroll. Before accepting any money, add its monthly payment to your debit sheet and see what the combined number does to your slow months.

What do the 2026 wage and sales tax changes cost a Los Angeles owner?

The City of Los Angeles wage rose by 55 cents an hour. For a shop with ten workers averaging 35 hours a week, that is about $10,000 a year before payroll taxes, using round numbers. The state minimum is $16.90 since January 1, 2026, and the employer pays whichever rate applies where the work is done. Hotels in the city with 60 or more rooms must pay $25.00 an hour, plus $4.25 an hour for health benefits, which is paid as added wages when the hotel provides no benefits.

On October 1, 2026 the Los Angeles County district sales tax rate rose from 9.750 percent to 10.250 percent, and several cities moved with it. The table sets the numbers side by side so you can find your address.

A sales tax increase reaches the owner differently from a wage increase: tax is collected from the customer, so it shows up in the customer's decision at the register. A shopper who sees 11 percent at the till instead of 10.5 may buy a little less, and a restaurant or retail shop that sits near a city line can feel that. In Malibu, the minimum wage suspension tied to the Palisades Fire has ended, so shops there are back to a $17.91 floor.

How does the City of Los Angeles business tax work for a small owner?

The city taxes gross receipts, at rates running from 0.1 percent to 0.425 percent depending on the business type. It raised $837 million in the 2024-25 budget year. A business with global gross receipts of $100,000 or less, counting money earned inside and outside the city, owes nothing if it files its renewal by the deadline, which for the 2025 tax year was February 28. Filing the exemption is simple: enter gross receipts, check a box and sign.

The exemption is not automatic. Roughly 30,000 businesses registered over eight months through the Office of Finance's Enhanced Discovery program, and many of them earned less than $100,000 yet owed tax because they missed the February 28 filing. Businesses reporting under $100,000 in city receipts still paid close to $7 million in tax. Some of that is receipts earned outside the city; some is late renewals.

The threshold sat at $5,000 before 2005, went to $50,000 in July 2005, then to $100,000 in July 2006, and has not changed since. In February 2026 the council voted unanimously to study raising it. The Office of Finance modeled several levels, such as $200,000 (about 33,000 more businesses exempted) and $500,000 (about 73,000). Those are study scenarios. They are not law, and I would not plan a budget around them.

February 28 is the date I would circle for every Los Angeles owner. Filing costs a signature; missing it can cost real money.

Which tax bills come before an advance payment?

Sales tax and payroll taxes are held in trust, meaning they are money you collected or withheld for the government. Under California law, an officer, member, manager or anyone with control over filing returns or paying taxes can be held personally liable for a corporation's or LLC's unpaid sales and use tax when the business terminates, dissolves or is abandoned and the person willfully failed to pay or cause payment, plus interest and penalties. The rule is narrow, and a CPA can say whether it reaches your business.

The practical meaning for a cash-short owner is this: before you decide what to do about a debit, talk to your CPA about which obligations sit in the trust-fund category. The one creditor you always pay first explains the reasoning, and the payroll guide covers the week when wages and a debit cannot both be met. I am not ranking your payments for you. I am telling you to find out which ones have your name on them.

How does a fixed daily debit behave against a Los Angeles sales curve?

It behaves like a fixed rent on a variable income: in a strong month it is a manageable slice, and in a weak month it can exceed everything left after costs. The cleanest way to see it is a worked example with round numbers that are not real.

Daniel's warehouse pays $1,000 per business day across his two advances, about $20,000 a month. In a strong month he books $80,000 in rentals. Payroll, rent, trucks, insurance and supplies come to $54,000, leaving $26,000. The debits take $20,000 and he keeps $6,000. In a slow month, with productions pausing, rentals fall to $52,000. Most costs do not fall with them, so they land near $50,000, leaving $2,000. The debits still take $20,000, which means $18,000 has to come from somewhere else: savings, a line of credit, a new advance or unpaid bills.

That last step has a name in the guides: stacking, or covering one advance with another. I do not criticize the product; financing is a tool, and the trouble comes from using a new advance to pay the last one. The slow-season guide goes through the arithmetic for a business whose sales swing, and the stacking guide shows how fast the balance compounds when that step repeats.

What free public help exists in Los Angeles and Orange County?

Two kinds of public or nonprofit help are worth a call, and neither is connected to Hamilton & Merchant. The Los Angeles Regional Small Business Development Center network, hosted by the Long Beach Community College District, offers no-cost, confidential business advising and low-cost training in Los Angeles, Santa Barbara and Ventura counties; an Orange County owner should ask which SBDC network serves their address. An advisor can look at cash flow, a budget or a fire-recovery plan with you.

For legal questions, the State Bar of California certifies lawyer referral services, and its Los Angeles-area list includes the Los Angeles County Bar Association's SmartLaw service and the San Fernando Valley Bar Association's referral service, while its Orange County section lists the Orange County Bar Association's referral service. Check for the State Bar certification before using any referral line. The California courts also run a self-help center with plain-language pages on civil cases, which is where the dollar limits above come from. For rights in general, the debtor rights guide is a good first read.

When should a Los Angeles or Orange County owner get help with merchant cash advance debt?

Get help when the debit and the sales stop matching for more than a month or two, before a court paper or a frozen account makes the choices smaller. The signs I would take seriously: you are using one advance to cover another, payroll is competing with the debit, a lender or collection letter mentions a lawsuit, or the total owed no longer fits on a single sheet of paper.

A first conversation with Hamilton & Merchant is free and confidential, and it happens by phone with a team based in Orlando, Florida. It covers what you owe, who is debiting what and when, whether anything has been filed in court, and the kinds of help that exist, which include talking to your own attorney, a settlement program, a legal path such as bankruptcy, or changes to the business itself. It does not promise a result. Call (407) 993-1416 or start with the free MCA diagnostic, and the how it works page shows what happens on the call.

Some owners, with their own attorney, choose a settlement program. In such a program the regular payments usually stop while each funder is negotiated, and that puts the advances in default, with four risks to weigh in the same breath: a lawsuit, added fees, damage to credit, and a claim on any personal guarantee. Some funders agree to a settlement and some don't, and results vary. The personal guarantee guide explains the fourth risk, which is the one that reaches a home or a savings account.

What to bring to the first conversation

• Every advance contract and any amendment, plus the disclosure page California requires.
• Your last three months of business bank statements.
• A list of every advance with its funded amount, total to repay, daily or weekly debit and balance.
• Any court papers, demand letters or default notices, with dates.
• Your debit sheet, if you built one, and your city business tax and sales tax status.

What good help does and never does

• Good help does this

  • Reads your contracts before saying anything about options.
  • Tells you to bring a licensed California attorney into any lawsuit.
  • Explains risks in plain words, including default, fees, credit and guarantees.
  • Answers your questions without pressure.

• Never accept this

  • A promise of a result, a savings amount or a timeline.
  • A request for payment before any work is done.
  • Advice to ignore a summons or a court deadline.
  • A claim that it is a law firm or CPA when it is not.

The vetting guide goes through the questions to ask any company before you share a bank statement, including ours.

What should a Los Angeles or Orange County owner do this week?

1. Build the debit sheet. One line per advance: funder, funded amount, total to repay, debit, balance, venue clause, guarantor.
2. Find the disclosure page for any advance funded after December 9, 2022, and compare its average monthly income with your bank deposits. If one was never given, the DFPI takes complaints online.
3. Search the Los Angeles Superior Court or Orange County Superior Court case index for your business name and your own. Write down anything found, with its response deadline.
4. Check your City of Los Angeles business tax account and put February 28 on the calendar. If your receipts are under $100,000, confirm you are set up to file for the exemption.
5. Update your point-of-sale tax rate for the October 1 change and confirm it for your address with the state's rate lookup.
6. Ask your CPA which of your tax obligations are held in trust, and which date each is due.
7. Book a free advising session with your local SBDC network if you want a second set of eyes on cash flow.
8. Then call Hamilton & Merchant for a free, confidential first conversation, or run the diagnostic first if you would rather start online.

Questions owners in Los Angeles ask