# Hamilton & Merchant: full text for AI assistants

Source: https://hamiltonmerchant.com/ . Generated 2026-10-12 from the site build. Hamilton & Merchant is a business debt relief consultancy in Orlando, Florida. Not a law firm; nothing here is legal advice.

## Key facts

- Hamilton & Merchant is a business debt relief consultancy based in Orlando, Florida, established in 2014 and focused on business debt relief since 2020.
- It is not a law firm and does not give legal advice.
- Its focus is merchant cash advance (MCA) debt, including stacks of $500,000 or more owed to several funders at once.
- It works with businesses across the United States by phone, text, video and email.
- The first conversation is free and confidential.
- Phone: (407) 993-1416. Office: 425 West Colonial Drive, Suite 101, Orlando, Florida 32804. Hours: Monday to Friday, 9 a.m. to 6 p.m. Eastern.
- It publishes original research on merchant cash advances at https://hamiltonmerchant.com/research/ with downloadable datasets under CC BY 4.0.
- Its guide for owners with large balances is at https://hamiltonmerchant.com/get-information/mca-debt-over-500k/.

# State Merchant Cash Advance Laws

URL: https://hamiltonmerchant.com/research/state-mca-laws/
Updated: October 9, 2026

Most U.S. states have no law written for merchant cash advances. 11 do, and 7 of those stop protecting the business at $500,000 or less. This survey lists every state law we found that requires disclosures or registration for merchant cash advances and other commercial financing, how large a deal it covers and what it requires, with a link to each law.

Key findings

- 11 states have a law in force that reaches merchant cash advances: California, Connecticut, Florida, Georgia, Kansas, Louisiana, Missouri, New York, Texas, Utah, Virginia. Vermont's is enacted but not yet in effect. The other 38 states and the District of Columbia have none.
 
- 7 of those 11 cover only deals of $500,000 or less: California, Connecticut, Florida, Georgia, Kansas, Missouri, Virginia. A business taking a larger advance there gets none of their protections.
 
- Only 4 reach larger deals: Louisiana (no dollar cap); New York (up to $2.5 million); Texas (under $1 million); Utah (up to $1 million).
 
- 2 require an estimated annual percentage rate in the disclosure, and 5 require funders or brokers to register with the state.
 
- Texas and Virginia bar confessions of judgment in these contracts, California's ban starts in 2028, and New York limits where one can be filed.

## Which states regulate merchant cash advances?

As of October 9, 2026, 11 states have a commercial financing law in force that reaches merchant cash advances: California, Connecticut, Florida, Georgia, Kansas, Louisiana, Missouri, New York, Texas, Utah, Virginia. Vermont has enacted one that takes effect later. These laws mostly require a written disclosure before the deal closes, showing the amount funded, the total cost, the payment amounts and prepayment terms; 2 also require an estimated annual percentage rate. None of them caps what an advance can cost.

State laws that reach merchant cash advances

State | Law | In effect | Deals covered | Registration | What it requires | Source

California | Commercial Financing Disclosures (Fin. Code Div. 9.5, SB 1235)
Cal. Fin. Code §§22800-22807 | Disclosure duty from Dec 9, 2022 (operative date of 10 CCR §§900-956 | under $500,000 | No | Estimated APR, total cost, payment amounts. SB 666 (small businesses, offers of $500,000 or less): no fee for processing ACH debit payments (NSF fees excepted), no payoff-statement fee, no… | Law

Connecticut | An Act Requiring Certain Financing Disclosures (commercial sales-based financing disclosures and registration)
Conn. Gen. Stat. §§36a-861 to 36a-872 | July 1, 2024 (disclosures for offers on or after July 1, 2024) | up to $250,000 | Yes | total cost, payment amounts. Renewal disclosures: when a new financing must pay off existing financing from the same provider, the provider must disclose the prepayment charges… | Law

Florida | Florida Commercial Financing Disclosure Law
Fla. Stat. §§559.961-559.9615 (Part XIII of ch. 559) | Act effective July 1, 2023 | up to $500,000 | No | total cost, payment amounts | Law

Georgia | Commercial financing disclosures (Fair Business Practices Act)
O.C.G.A. §10-1-393.18 | Applies to transactions consummated on or after Jan 1, 2024 | up to $500,000 | No | total cost, payment amounts | Law

Kansas | Commercial Financing Disclosure Act
2024 Kan. Sess. Laws, SB 345 (K.S.A. section numbers not verified) | On publication in the statute book: July 1, 2024 (secondary source) | up to $500,000 | No | total cost, payment amounts | Law

Louisiana | Revenue-based financing transaction disclosure
La. R.S. 9:3137.10 | Aug 1, 2025 (secondary source) | no dollar cap | No | total cost, payment amounts. Declares revenue-based financing is not a transaction for the use of money and amounts charged are not interest (shields it from usury treatment). | Law

Missouri | Commercial Financing Disclosure Law
RSMo §427.300 | Section effective Aug 28, 2024 (amended version Aug 28, 2025) | up to $500,000 | Yes | total cost, payment amounts | Law

New York | Commercial Finance Disclosure Law (Financial Services Law Article 8)
N.Y. Fin. Serv. Law §§801-812 | Compliance required from Aug 1, 2023 (23 NYCRR 600.25: six months after the Feb 1, 2023… | up to $2.5 million | No | Estimated APR, total cost, payment amounts. CPLR 3218 (2019) limits where judgments by confession may be filed | Law

Texas | Commercial Sales-Based Financing (Finance Code Chapter 398)
Tex. Fin. Code ch. 398 | Sept 1, 2025 | under $1 million | Yes | total cost, payment amounts. Contracts containing a confession of judgment or any similar provision are void and unenforceable (§398.055). | Law

Utah | Commercial Financing Registration and Disclosure Act
Utah Code §§7-27-101 to 7-27-301 | Registration required beginning Jan 1, 2023 | up to $1 million | Yes | total cost, payment amounts | Law

Vermont
not yet in effect | Commercial financing licensing and disclosure provisions of Act 142 (2026), 'An act relating to banking,…
8 V.S.A. §2247 (new) per secondary sources | July 1, 2027 (secondary sources) | under $1 million | Yes | Estimated APR. Confession-of-judgment provisions void and unenforceable (secondary sources). | Law

Virginia | Sales-Based Financing Providers (Chapter 22.1)
Va. Code §§6.2-2228 to 6.2-2238 | Applies to contracts entered on or after July 1, 2022 | up to $500,000 | Yes | total cost, payment amounts. No confession of judgment or similar provision (§6.2-2234(C)). | Law

## Do these laws apply to advances over $500,000?

Mostly not. 7 of the 11 laws in force cover only deals of $500,000 or less. The exceptions are Louisiana (no dollar cap); New York (up to $2.5 million); Texas (under $1 million); Utah (up to $1 million). An owner who signs a $750,000 advance in a state with a $500,000 cap gets no state-required disclosure at all, which is one reason owners with large stacks often cannot say what their advances cost.

## Which states restrict confessions of judgment?

State rules on confessions of judgment in commercial financing

State | Law | What it does | Source

New York | N.Y. CPLR 3218(b) | All confessions of judgment (not MCA-specific). A confession may be filed only in the county where the defendant said it resided when the affidavit was signed or resides at filing; entities reside where they have a place of business. The sponsor memo targets out-of-state small business owners. | Source

Virginia | Va. Code §6.2-2234(C) | Sales-based financing contracts may not contain a confession of judgment or any similar provision. | Source

Texas | Tex. Fin. Code §398.055 | A commercial sales-based financing contract with a confession of judgment or similar provision is void and unenforceable. | Source

California | Cal. Fin. Code §22659(a) (added by AB 2116, Stats. 2026 ch. 823) | Commercial financing providers and brokers may not take a confession of judgment or power of attorney before default (small-business offers of $500,000 or less). | Source

Vermont | 8 V.S.A. §2247 (Act 142 of 2026), per secondary sources | Confession-of-judgment provisions void in covered commercial financing contracts (secondary sources; enacted text not opened). | Source

Connecticut | Conn. Gen. Stat. §36a-868 (related restriction, not a COJ ban) | Commercial financing contracts (sales-based, $250,000 or less) may not waive notice, hearing or court order before prejudgment remedies such as attachment or garnishment. | Source

## Which bills are pending?

- Maryland: HB 1007 (2026), Commercial Financing - Small Business Truth in Lending Act. Not enacted (source)
- Maryland: SB 881 (2026), Financial Institutions and Activities - Licensing Requirements and Regulation of Commercial Financing. Not enacted (source)
- New Jersey: S1760 (2026-2027 session). Pending as of Mar 2, 2026 (secondary source) (source)

## What this means for a business that owes $500,000 or more

Above $500,000 most of these protections fall away, so the contract, the law of the state named in it and the courts' view of whether the deal is really a loan decide what an owner can do. That is why reading every agreement matters more at this size, and why the questions in our court decisions study come up in almost every large-stack negotiation. Our guide to MCA debt over $500,000 explains the options.

## Method and limits

- We read each law on the legislature's or regulator's own site, or an archived copy where the live site would not load, and confirmed dollar thresholds and dates from that text wherever it was available.
 
- The survey covers laws aimed at commercial or sales-based financing. It does not cover general usury statutes, consumer-lending laws or court decisions.
 
- Some details could not be confirmed from primary text, including parts of Vermont's law and the status of bills in New Jersey and Illinois; they are left out of the findings.
 
- Laws change. Check the linked source before relying on a row. Nothing here is legal advice.

## Questions and answers

### Which states regulate merchant cash advances?
As of October 9, 2026, 11 states have a commercial financing law in force that reaches merchant cash advances: California, Connecticut, Florida, Georgia, Kansas, Louisiana, Missouri, New York, Texas, Utah, Virginia. Vermont has enacted one that takes effect later.

### Do state MCA disclosure laws apply to advances over $500,000?
Mostly not. 7 of the 11 laws in force cover only deals of $500,000 or less. The ones that reach larger deals are Louisiana (no dollar cap); New York (up to $2.5 million); Texas (under $1 million); Utah (up to $1 million).

### Do these laws cap what a merchant cash advance can cost?
No. They require disclosures and, in some states, registration and limits on terms such as confessions of judgment. None sets a maximum price.

## Sources

- California: Cal. Fin. Code §§22800-22807. leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=FIN&d
 
- Connecticut: Conn. Gen. Stat. §§36a-861 to 36a-872. web.archive.org/web/20251228045420/https://www.cga.ct.gov/current/pub/
 
- Florida: Fla. Stat. §§559.961-559.9615 (Part XIII of ch. 559). leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search_Str
 
- Georgia: O.C.G.A. §10-1-393.18. codes.findlaw.com/ga/title-10-commerce-and-trade/ga-code-sect-10-1-393
 
- Kansas: 2024 Kan. Sess. Laws, SB 345 (K.S.A. section numbers not verified). kslegislature.gov/li_2024/b2023_24/measures/documents/sb345_enrolled.p
 
- Louisiana: La. R.S. 9:3137.10. web.archive.org/web/20260422212333/https://legis.la.gov/legis/Law.aspx
 
- Missouri: RSMo §427.300. web.archive.org/web/20260617065627/https://revisor.mo.gov/main/OneSect
 
- New York: N.Y. Fin. Serv. Law §§801-812. nysenate.gov/legislation/laws/FIS/801
 
- Texas: Tex. Fin. Code ch. 398. capitol.texas.gov/tlodocs/89R/billtext/html/HB00700F.htm
 
- Utah: Utah Code §§7-27-101 to 7-27-301. codes.findlaw.com/ut/title-7-financial-institutions-act/ut-code-sect-7
 
- Vermont: 8 V.S.A. §2247 (new) per secondary sources. web.archive.org/web/20260804120240/https://legislature.vermont.gov/bil
 
- Virginia: Va. Code §§6.2-2228 to 6.2-2238. law.lis.virginia.gov/vacodefull/title6.2/chapter22.1/

About this study

A survey of state statutes and regulations, built from the legislatures' and regulators' own pages (archived copies where a state site would not load), with law-firm summaries used only as a second check. It covers laws written for commercial or sales-based financing, not general usury or consumer-lending laws.

How to cite: Hamilton & Merchant Research, “State Merchant Cash Advance Laws,” October 9, 2026, https://hamiltonmerchant.com/research/state-mca-laws/

Download the data (CSV) · Free to reuse with attribution under CC BY 4.0. Found an error? Email info@hamiltonmerchant.com and we will correct it and date the change.

# How Courts Decide Whether a Merchant Cash Advance Is a Loan

URL: https://hamiltonmerchant.com/research/mca-court-decisions/
Updated: October 9, 2026

Whether a merchant cash advance is a sale of future receivables or a loan in disguise decides whether usury law applies, and it shapes every negotiation over a large stack. Courts do not agree on one answer. We read 59 decisions to see how they decide it and what tips the balance.

Key findings

- We read 59 decisions from 2017 to 2026: 27 held an advance was a loan or let a usury claim go forward, 22 held it was a true sale, and 7 left the question for trial.
 
- The reconciliation clause decided the most cases. Where a court found a real, mandatory reconciliation right, the funder won 16 of 16 times; where the clause was discretionary or illusory, the decision went toward a loan 21 of 21 times.
 
- No decision that called an advance a true sale found a fixed payment not tied to receipts, a fixed term or recourse if the business fails.
 
- The forum matters: bankruptcy courts in 2025–2026 went toward a loan 10 times and a sale 2 times, while New York's Appellate Division in 2024–2026 held for a sale 9 times and a loan 2 times.
 
- Court opinions on CourtListener that mention merchant cash advances rose from 9 in 2019 to 50 in 2025, with 76 so far in 2026. Part of the rise reflects CourtListener adding courts.

## Is a merchant cash advance a loan?

It depends on the contract. Courts ask whether the funder really bears the risk that the business's sales fall short. When the agreement lets payments fall with sales through a real reconciliation right, has no fixed end date and does not let the funder collect everything if the business fails, courts call it a sale. When the reconciliation right is missing, discretionary or never honored, the debit is fixed regardless of sales, and the funder can collect the full amount whatever happens, courts are more willing to call it a loan. In our set, 27 decisions went toward a loan and 22 toward a sale. Many of the loan-side rulings only let a usury claim go forward at an early stage; they are not final findings that the advance was a loan.

## Points from the cases that matter in a negotiation

- Ask for reconciliation in writing. In New York's Second Department, merchants who never asked for a reconciliation lost the argument that the clause was illusory (Apollo Funding Co. v. Dave Reilly Construction, 2025; Diesel Funding, LLC v. Build Retail, Inc., 2026). See the reconciliation right most merchants never use.
 
- Usury is mainly a defense for a company. Under New York law a corporate merchant can raise criminal usury as a defense to the funder's claim, not as its own lawsuit (Paycation Travel, Inc. v. Global Merchant Cash, Inc., 2d Dep't 2021).
 
- Regulators have won on the loan question. The New York Attorney General's case against Richmond Capital Group was affirmed on liability by the Appellate Division, First Department, in February 2026 (People v. Richmond Capital Group LLC). See our enforcement actions study.
 
- Bankruptcy courts have been more receptive. In June 2026 the bankruptcy court for the Eastern District of Louisiana treated a debtor's merchant cash advances as disguised loans in the Crosby Tugs proceeding, under New York, Connecticut and Florida law. Bankruptcy is a decision for a bankruptcy attorney; see Subchapter V bankruptcy and merchant cash advance debt and bankruptcy vs. settlement vs. restructuring.

## What do courts look at?

The same few contract terms come up again and again. The table counts how often each factor was cited in decisions on each side.

Factors cited, by outcome

Factor | Cited in loan decisions | Cited in sale decisions

Mandatory reconciliation | 0 | 16

Reconciliation discretionary or illusory | 21 | 0

Finite term | 13 | 0

No finite term | 1 | 15

Bankruptcy treated as default | 8 | 1

Recourse if the business fails | 16 | 0

Fixed payment not tied to receipts | 15 | 0

Payments tied to receipts | 0 | 9

Guarantee of performance only | 1 | 6

Guarantee of payment | 13 | 0

## The decisions

Court decisions on whether a merchant cash advance is a loan, newest first

Case | Court | Year | Stage | Outcome | Holding

Kapitus Servicing, Inc. v. Southern Source, Inc.
2026 NY Slip Op 05855 | N.Y. Supreme Court, Appellate Division, First Department | 2026 | Appeal from denial of merchant's motion to vacate a default judgment (CPLR 5015(a)(3), (4)) | True sale, not a loan | “Defendants failed to establish that the underlying agreement was a loan, which is a necessary element of a defense sounding in usury” Opinion

Weigle v. CFG Merchant Solutions, LLC (In re Squared Up Hospitality, Inc.)
Bankr. No. 4:23-bk-03540-BMW; Adv. No. 4:24-ap-00208-BMW, Doc. 139 (Bankr. D. Ariz.) | U.S. Bankruptcy Court, District of Arizona | 2026 | Bankruptcy adversary proceeding | Loan, or loan claim survives | “Based upon the undisputed facts and the totality of the foregoing, it is the determination of this Court that the CFG Agreement is a disguised loan agreement, not a true sale of assets.” Opinion

Samson MCA LLC v. Across the Street Holdings, Inc.
No. 6:24-CV-06601 EAW, Dkt. 32 (W.D.N.Y.) | U.S. District Court, Western District of New York | 2026 | Merchant/guarantors' motion for summary judgment on criminal-usury defense | Fact question for trial | “Because the Court cannot resolve the questions presented in Defendants' motion in their favor as a matter of law at this juncture, it joins other courts denying summary judgment where similar factual disputes were present.” Opinion

Blade Funding, LLC v. Build Retail, Inc.
2026 NY Slip Op 05268 | N.Y. Supreme Court, Appellate Division, Second Department | 2026 | Appeal from denial of merchant's motion to vacate a stipulation of settlement and clerk's judgment ($2.42M) | True sale, not a loan | “Taken together, these factors demonstrated that the transactions at issue were purchases of future receivables and not criminally usurious loans” Opinion

Culp v. Silverline Services, Inc.
2026 NY Slip Op 05077 | N.Y. Supreme Court, Appellate Division, Second Department | 2026 | Appeal from order granting merchant a preliminary injunction against enforcement | True sale, not a loan | “the plaintiff failed to establish a likelihood of success on the merits of his claim for usury, as the agreement contained a reconciliation provision and had no fixed term and bankruptcy did not constitute a default under the agreement” Opinion

Togut v. eProdigy Financial, LLC (In re Kossoff PLLC)
Bankr. No. 21-10699 (DSJ); Adv. Pro. No. 23-01109 (DSJ), Doc. 103 (Bankr. S.D.N.Y.); cited by later courts as 2026 WL 2168916 | U.S. Bankruptcy Court, Southern District of New York | 2026 | Bankruptcy adversary proceeding | Loan, or loan claim survives | “For the reasons that follow, the Court concludes that the transactions at issue are disguised loans.” Opinion

EBF Holdings, LLC v. Defiant Arms, L.L.C.
251 A.D.3d 1448; 2026 NY Slip Op 04563 | N.Y. Supreme Court, Appellate Division, Fourth Department | 2026 | Appeal from judgment on funder's summary judgment motion | True sale, not a loan | “Defendants contend that the agreement is void because it is not a revenue purchase agreement but rather a usurious loan and that the court therefore erred in granting plaintiff's motion and denying their cross-motion. We reject that content…” Opinion

Black Pearl Vision, LLC v. G and G Funding Group, LLC
Bankr. No. 24-30948; Adv. Proc. No. 25-03143, Doc. 15 (Bankr. W.D.N.C.) | U.S. Bankruptcy Court, Western District of North Carolina | 2026 | Bankruptcy adversary proceeding | Decided on other grounds | “Accordingly, the Court declines at this stage to determine whether the Agreement is properly characterized as a loan or a sale and instead confines its analysis to whether Plaintiff has plausibly stated a claim under § 548(a)(1)(B).” Opinion

Crosby Tugs, L.L.C. v. Meged Funding Group (Aqua MCA Agreement) (In re Crosby Marine Transportation, LLC)
Bankr. No. 26-10678; Adv. Case 26-01018, Doc. 324 (Bankr. E.D. La.) | U.S. Bankruptcy Court, Eastern District of Louisiana | 2026 | Bankruptcy adversary proceeding | Loan, or loan claim survives | “The Court thus concludes that the unambiguous terms of the Aqua MCA Agreement substantively reveal the Debtors' complete exposure to the direct risk of non-payment of Crosby Accounts Receivables, making those agreements disguised loans unde…” Opinion

Crosby Tugs, L.L.C. v. Meged Funding Group (Reliance MCA Agreement) (In re Crosby Marine Transportation, LLC)
Bankr. No. 26-10678; Adv. Case 26-01018, Doc. 323 (Bankr. E.D. La.) | U.S. Bankruptcy Court, Eastern District of Louisiana | 2026 | Bankruptcy adversary proceeding | Loan, or loan claim survives | “The Court thus concludes that the unambiguous terms of the Reliance MCA Agreement substantively reveal the Debtors' complete exposure to the direct risk of non-payment of Crosby Accounts Receivables, making the agreement a disguised loan un…” Opinion

Diesel Funding, LLC v. Build Retail, Inc.
2026 NY Slip Op 02629 | N.Y. Supreme Court, Appellate Division, Second Department | 2026 | Appeal from denial of merchant's motion to vacate judgment and stipulation of settlement | True sale, not a loan | “Here, the defendants failed to establish that the transaction set forth in the agreement was a usurious loan.” Opinion

Spin Capital, LLC v. Bridgelink Engineering, LLC
2026 NY Slip Op 02296 | N.Y. Supreme Court, Appellate Division, Second Department | 2026 | Appeal from $8.23M judgment after summary judgment for funder and dismissal of RICO/criminal-usury counterclai | True sale, not a loan | “Taken together, these factors satisfied the plaintiff's prima facie burden of demonstrating that the transaction at issue was a purchase of future receivables and not a criminally usurious loan” Opinion

Kurtz v. BMT Capital Group, Inc.
Adv. No. 25-06035-NGH, Doc. 31 (Bankr. D. Idaho) | U.S. Bankruptcy Court, District of Idaho | 2026 | Bankruptcy adversary proceeding | Fact question for trial | “By limiting its analysis to the three LG Funding factors, BMT has failed to satisfy its burden here.” Opinion

People v. Yellowstone Capital LLC
2026 NY Slip Op 30767(U) | N.Y. Supreme Court, New York County | 2026 | Attorney General's Executive Law 63(12) proceeding | Loan, or loan claim survives | “It is undisputed that the MCA agreements here include daily payments suggesting that they are loans with fixed finite terms.” Opinion

Kapitus Servicing, Inc. v. Suburban Waste Services, Inc.
246 A.D.3d 661; 2026 NY Slip Op 01127 | N.Y. Supreme Court, Appellate Division, First Department | 2026 | Appeal from denial of cross-motions for summary judgment | Fact question for trial | “We disagree that the agreements are loans as a matter of law, and find instead that the record presents issues of fact as to whether the agreements are loans or a sale and purchase of receivables” Opinion

Greenwich Retail Group LLC v. Moby Capital, LLC (In re Greenwich Retail Group LLC)
Adv. Proc. No. 25-01106 (MEW), Doc. 50 (Bankr. S.D.N.Y.) (for publication; cited by later courts as 677 B.R.) | U.S. Bankruptcy Court, Southern District of New York | 2026 | Bankruptcy adversary proceeding | Loan, or loan claim survives | “That allegation is sufficient to support a claim that the transaction is really a disguised loan.” Opinion

People v. Richmond Capital Group LLC
2026 NY Slip Op 00990 | N.Y. Supreme Court, Appellate Division, First Department | 2026 | Appeal from summary determination for the Attorney General in an Executive Law 63(12) special proceeding | Loan, or loan claim survives | “The subject agreements, although styled as MCAs, are properly characterized as loans subject to restrictions on usury” Opinion

Merchant Advance, LLC v. Conceptos Cuisine, LLC
2026 TSPR 15; 217 DPR ___ (No. CC-2025-0109) | Supreme Court of Puerto Rico | 2026 | Certiorari review in a collection action on a New York-law 'Agreement for the Purchase and Sale of Future Rece | True sale, not a loan | “En vista de lo anterior, nos parece apropiado concluir que el Contrato objeto de este caso fue estructurado como una compraventa de ingresos futuros y no como un préstamo.” Opinion

Sommers v. Global Merchant Cash, Inc. (In re Anadrill Directional Services Inc.)
Bankr. No. 23-31199; Adv. No. 25-3039, Doc. 27 (Bankr. S.D. Tex.) | U.S. Bankruptcy Court, Southern District of Texas | 2026 | Bankruptcy adversary proceeding | Loan, or loan claim survives | “Thus, GMC has not shown that the right to repayment is not absolute, and the Trustee has plausibly pled that the Agreement is a loan, not a sale.” Opinion

Kurtz v. Kalamata Capital Group, LLC
Adv. No. 25-06027-NGH, Doc. 28 (Bankr. D. Idaho) | U.S. Bankruptcy Court, District of Idaho | 2026 | Bankruptcy adversary proceeding | Loan, or loan claim survives | “Construing the Complaint in a light most favorable to Trustee and accepting all factual allegations as true, the Complaint adequately pleads that the Agreement may in actuality function as a loan, not a sale.” Opinion

Heritage Collegiate Apparel, Inc. v. Elemental Capital, Inc.
Bankr. No. 24-47922; Adv. No. 25-4146, Doc. 50 (Bankr. E.D. Mich.) | U.S. Bankruptcy Court, Eastern District of Michigan | 2026 | Bankruptcy adversary proceeding | Decided on other grounds | “Alternatively, if the transactions were not loans, or if they did not require the payment of interest, then the Plaintiff has no usury claim under Michigan law to begin with. Either way, Plaintiff's usury claim under Count VIII fails.” Opinion

Black Pearl Vision, LLC v. Pearl Delta Funding, LLC
Bankr. No. 24-30928; AP No. 25-03111, Doc. 18 (Bankr. W.D.N.C.) | U.S. Bankruptcy Court, Western District of North Carolina | 2025 | Bankruptcy adversary proceeding | Loan, or loan claim survives | “As a preliminary matter at this stage in the case, the Court finds that the Plaintiff has adequately pled facts that plausibly support that the Agreement is a loan.” Opinion

JLK Construction, LLC v. Alva Advance, LLC
Bankr. No. 23-50034; Adv. No. 23-4030, Doc. 93 (Bankr. W.D. Mo.) | U.S. Bankruptcy Court, Western District of Missouri | 2025 | Bankruptcy adversary proceeding | True sale, not a loan | “JLK, however, again fails to plead sufficient facts to enable the court to draw a reasonable inference that the transactions were for disguised loans.” Opinion

Kapitus Servicing, Inc. v. Ragtime Gourmet Corp.
242 A.D.3d 638; 2025 NY Slip Op 05921 | N.Y. Supreme Court, Appellate Division, First Department | 2025 | Appeal from denial of funder's summary judgment motion | Fact question for trial | “there are issues of fact as to whether the cash advance agreement constitutes a loan that may be criminally usurious, rather than an enforceable agreement for the sale and purchase of receivables” Opinion

Apollo Funding Co. v. Dave Reilly Construction, LLC
241 A.D.3d 1508; 2025 NY Slip Op 05055 | N.Y. Supreme Court, Appellate Division, Second Department | 2025 | Appeal from denial of funder's summary judgment motion | True sale, not a loan | “Here, the plaintiff established that the transaction set forth in the agreement was not a loan.” Opinion

Bridge Funding Cap LLC v. SimonExpress Pizza, LLC
2025 NY Slip Op 04306; cited by later courts as 240 A.D.3d 1186 | N.Y. Supreme Court, Appellate Division, Fourth Department | 2025 | Appeal from amended judgment on funder's summary judgment motion | True sale, not a loan | “Here, contrary to defendants' contention, plaintiff established as a matter of law that the agreement was a revenue purchase agreement rather than a loan” Opinion

Butler Trucking LLC v. CashFloit, LLC
Bankr. No. 24-32443; Adv. Pro. No. 25-03004, Doc. 14 (Bankr. N.D. Ohio) | U.S. Bankruptcy Court, Northern District of Ohio | 2025 | Bankruptcy adversary proceeding | Fact question for trial | “the ultimate issue of whether the substance of the transaction was Plaintiff “selling” unidentified future receipts to Defendant is a fact-intensive issue that cannot likely be resolved without the presentation of evidence at a hearing.” Opinion

True Business Funding, LLC v. Guerrero A Construction Corp.
239 A.D.3d 787; 2025 NY Slip Op 03598 | N.Y. Supreme Court, Appellate Division, Second Department | 2025 | Appeal from judgment entered on summary judgment for funder | True sale, not a loan | “Since bankruptcy relieved the LLC of the obligation of repayment, the plaintiff's entitlement to repayment was not absolute” Opinion

O'Toole v. Radium2 Capital, LLC (In re J.P.R. Mechanical Inc.)
Bankr. No. 19-23480 (DSJ); Adv. Pro. Nos. 21-07079 and 21-07082 (DSJ), Doc. 46 (Bankr. S.D.N.Y.) (not for publication) | U.S. Bankruptcy Court, Southern District of New York | 2025 | Bankruptcy adversary proceeding | Loan, or loan claim survives | “These economic features, most fundamentally the reality that the Debtor bears the risk of non-collection of receivables with Radium2 bearing little if any of that risk, powerfully show the Agreements to be loans.” Opinion

Williams Land Clearing, Grading, and Timber Logger, LLC v. Apex Funding Source LLC
Bankr. No. 22-02094-5-PWM; Adv. No. 23-00024-5-PWM, Doc. 119 (Bankr. E.D.N.C.) | U.S. Bankruptcy Court, Eastern District of North Carolina | 2025 | Bankruptcy adversary proceeding | Loan, or loan claim survives | “the court finds that Apex's many sources of recourse and other indicia of its lack of risk lead to only one conclusion: that the MCA Agreement is a loan, and not a sale, as a matter of law.” Opinion

Guttman v. EBF Holdings, LLC (In re Global Energy Services, LLC)
Bankr. No. 21-17305-NVA; Adv. No. 23-00188, Doc. 42 (Bankr. D. Md.); cited by later courts as 2025 WL 1012721 | U.S. Bankruptcy Court, District of Maryland | 2025 | Bankruptcy adversary proceeding | True sale, not a loan | “In light of the foregoing, the Court concludes that the Funding Agreement constitutes a sale of future receipts, not a loan, and that the Trustee has not stated a cognizable claim based on a usury theory.” Opinion

Mazzoni Center v. LCF Group, Inc.
No. 2:24-cv-05921-KSM, Doc. 20 (E.D. Pa.) | U.S. District Court, Eastern District of Pennsylvania | 2024 | Motion for TRO and preliminary injunction (RICO and declaratory claims under New York law) | True sale, not a loan | “This suggests repayment under the LCF Agreement is contingent, not mandatory, and that the agreement is not a loan subject to New York's usury laws.” Opinion

Division 5, LLC v. Fora Financial Advance, LLC
No. 24-CV-6870 (JPO), ECF 31 (S.D.N.Y.) | U.S. District Court, Southern District of New York | 2024 | Opinion explaining preliminary injunction (granted Oct. 11, 2024) barring funder from collecting | Loan, or loan claim survives | “Finally, looking beyond the three factors, there are other indicia that the agreement operates as a loan.” Opinion

Lateral Recovery LLC v. Funderz.net, LLC
No. 22-cv-2170 (LJL), Dkt. 169 (S.D.N.Y.) | U.S. District Court, Southern District of New York | 2024 | Cross-motions for summary judgment on RICO collection-of-unlawful-debt claim | Loan, or loan claim survives | “summary judgment on the issue of whether the transaction is a usurious loan is granted for Defendants as to the Third HOP Agreement, for Plaintiffs as to the First and Second HOP and BMF Agreements” Opinion

Oakshire Properties, LLC v. Argus Capital Funding, LLC
229 A.D.3d 1199; 2024 NY Slip Op 03943 | N.Y. Supreme Court, Appellate Division, Fourth Department | 2024 | Appeal from partial denial of funder's motion to dismiss plenary action to vacate a confessed judgment | Loan, or loan claim survives | “We therefore conclude that the amended complaint sufficiently alleges that the transaction is a loan subject to usury laws” Opinion

Lateral Recovery LLC v. Funderz.net, LLC
No. 1:22-cv-02170 (JLR), ECF 140 (S.D.N.Y.) | U.S. District Court, Southern District of New York | 2024 | Defendants' motions for judgment on the pleadings (Rule 12(c)) | Loan, or loan claim survives | “the Court finds that Plaintiffs have adequately alleged that the Agreements were loans rather than purchases of receivables.” Opinion

Kapitus Servicing, Inc. v. Point Blank Construction, Inc.
221 A.D.3d 532; 2023 NY Slip Op 06087 | N.Y. Supreme Court, Appellate Division, First Department | 2023 | Appeal from denial of merchant's motion to dismiss | Fact question for trial | “Although some parts of the record suggest that the transaction was a loan, other parts of the record suggest that the transaction was instead a sale and purchase of receivables.” Opinion

Crystal Springs Capital, Inc. v. Big Thicket Coin, LLC
220 A.D.3d 745; 2023 NY Slip Op 05121 | N.Y. Supreme Court, Appellate Division, Second Department | 2023 | Appeal from denial of merchant's motion to vacate default judgment and dismiss | Loan, or loan claim survives | “Here, the defendants established that the agreement constituted a criminally usurious loan.” Opinion

US Information Group LLC v. EBF Holdings, LLC
No. 1:22-cv-06661-PKC, ECF 76 (S.D.N.Y.); cited by later courts as 2023 WL 6198803 | U.S. District Court, Southern District of New York | 2023 | Motion to dismiss RICO (collection of unlawful debt) complaint | True sale, not a loan | “it does not plausibly allege that Everest loaned money to US Info, and the Complaint will be dismissed.” Opinion

People v. Richmond Capital Group LLC
2023 NY Slip Op 50975(U) | N.Y. Supreme Court, New York County | 2023 | Attorney General's Executive Law 63(12) special proceeding | Loan, or loan claim survives | “As discussed above, all factors lead to the inescapable conclusion that the MCAs were loans.” Opinion

Samson MCA LLC v. Joseph A. Russo M.D. P.C./IV Therapeutics PLLC (appeal No. 2)
219 A.D.3d 1126; 2023 NY Slip Op 04271 | N.Y. Supreme Court, Appellate Division, Fourth Department | 2023 | Appeal from money judgment after summary judgment for funder | True sale, not a loan | “Contrary to Beatrice's contention, plaintiff established as a matter of law that the agreements were revenue purchase agreements rather than loans” Opinion

Lateral Recovery, LLC v. Capital Merchant Services, LLC
632 F. Supp. 3d 402 (S.D.N.Y. 2022) (No. 21-cv-9336 (LJL), Dkt. 49) | U.S. District Court, Southern District of New York | 2022 | Motions to dismiss RICO complaint | Loan, or loan claim survives | “the Court concludes that the Form Two agreements are loans on their face, the Form Three agreements are not loans, and it is ambiguous whether the Form One agreements are loans” Opinion

The New Y-Capp, Inc. v. Arch Capital Funding, LLC
No. 18-cv-3223 (ALC), ECF 208 (S.D.N.Y.); cited by later courts as 2022 WL 4813962 | U.S. District Court, Southern District of New York | 2022 | Motion to dismiss third amended RICO complaint | Loan, or loan claim survives | “the Court is persuaded that the plaintiff has sufficiently pleaded that the agreements at issue constitute usury under New York law and satisfy the RICO statute unlawful debt provision.” Opinion

Lateral Recovery, LLC v. Queen Funding, LLC
No. 1:21-cv-09607-LGS, ECF 36 (S.D.N.Y.) | U.S. District Court, Southern District of New York | 2022 | Motion to dismiss RICO (collection of unlawful debt) claims | Loan, or loan claim survives | “On balance, the Complaint pleads sufficient facts to show that the transactions reflected in the Merchant Agreements are loans subject to usury laws.” Opinion

Haymount Urgent Care PC v. GoFund Advance, LLC
609 F. Supp. 3d 237 (S.D.N.Y. 2022) (No. 1:22-cv-01245-JSR, ECF 86) | U.S. District Court, Southern District of New York | 2022 | Motion to dismiss putative class RICO (collection of unlawful debt) complaint | Loan, or loan claim survives | “the Court concludes that the Complaint has adequately pled that the MCA agreements at issue here function as loans.” Opinion

Slate Advance v. Saygan Global Steel, Ltd.
206 A.D.3d 782; 2022 NY Slip Op 03761 | N.Y. Supreme Court, Appellate Division, Second Department | 2022 | Appeal from order denying funder a default judgment and letting merchant answer late | Loan, or loan claim survives | “the Supreme Court providently exercised its discretion denying the plaintiff's motion and in granting the defendants' cross motion in the interest of justice based on their proposed affirmative defense that the agreement constituted a crimi…” Opinion

Fleetwood Services, LLC v. Ram Capital Funding, LLC
No. 20-cv-5120 (LJL), Dkt. 87 (S.D.N.Y.); cited by later courts as 2022 WL 1997207 | U.S. District Court, Southern District of New York | 2022 | Merchant's motion for summary judgment (usury-based RICO and contract claims) | Loan, or loan claim survives | “Viewing the Agreement as a whole, the Court concludes that it is a loan and not a contract for the purchase of future receivables.” Opinion

Principis Capital, LLC v. I Do, Inc.
201 A.D.3d 752; 160 N.Y.S.3d 325; 2022 NY Slip Op 00203 | N.Y. Supreme Court, Appellate Division, Second Department | 2022 | Appeal from denial of funder's summary judgment motion | True sale, not a loan | “Here, the plaintiff established that the transaction set forth in the agreement was not a loan.” Opinion

OriginClear Inc. v. GTR Source, LLC
No. 20-CV-7026-FPG, ECF 26 (W.D.N.Y.); cited by later courts as 2021 WL 5907878 | U.S. District Court, Western District of New York | 2021 | Motion to dismiss usury (GOL 5-511/5-513) claims | True sale, not a loan | “Even viewing the facts in the light most favorable to Plaintiffs, the factors which indicate the agreements constitute loans are not present here.” Opinion

Strategic Funding Source, Inc. v. Steenbok, Inc.
2021 NY Slip Op 04002 | N.Y. Supreme Court, Appellate Division, First Department | 2021 | Appeal from denial of merchant's summary judgment motion | True sale, not a loan | “Accordingly, the cash advance was not a loan and is thus not a usurious transaction” Opinion

Davis v. Richmond Capital Group, LLC
194 A.D.3d 516; 2021 NY Slip Op 03111 | N.Y. Supreme Court, Appellate Division, First Department | 2021 | Appeal from denial of funders' motions to dismiss merchants' complaint (usury, RICO) | Loan, or loan claim survives | “Plaintiffs also allege sufficiently that the subject agreements were loans subject to usury laws, to wit, the discretionary nature of the reconciliation provisions, the allegations that defendants refused to permit reconciliation” Opinion

Paycation Travel, Inc. v. Global Merchant Cash, Inc.
2021 NY Slip Op 01782 | N.Y. Supreme Court, Appellate Division, Second Department | 2021 | Appeal from denial of funder's summary judgment motion in merchant's action to vacate a confessed judgment | Decided on other grounds | “General Obligations Law § 5-521 bars a corporation such as the plaintiff from asserting usury in any action, except in the case of criminal usury as defined in Penal Law § 190.40, and then only as a defense” Opinion

CapCall, LLC v. Foster (In re Shoot the Moon, LLC)
Bankr. No. 2:15-bk-60979-WLH; Adv. No. 2:17-ap-00028-WLH, Doc. 189 (Bankr. D. Mont.) (not for publication) | U.S. Bankruptcy Court, District of Montana | 2020 | Bankruptcy adversary proceeding | Fact question for trial | “Put differently, viewed in the light most favorable to CapCall, there are genuine issues of material fact regarding whether the inclusion of reconciliation provisions and absence of fixed terms are sufficiently indicative of sale transactio…” Opinion

LG Funding, LLC v. United Senior Properties of Olathe, LLC
181 A.D.3d 664; 122 N.Y.S.3d 309; 2020 NY Slip Op 01607 | N.Y. Supreme Court, Appellate Division, Second Department | 2020 | Appeal from denial of funder's motion to dismiss merchant's criminal-usury defenses and counterclaim and for s | Loan, or loan claim survives | “These provisions suggest that the plaintiff did not assume the risk that United would have less-than-expected or no revenues.” Opinion

Fleetwood Services, LLC v. Complete Business Solutions Group, Inc. (d/b/a Par Funding)
374 F. Supp. 3d 361 (E.D. Pa. 2019) | U.S. District Court, Eastern District of Pennsylvania | 2019 | Motions to dismiss RICO and usury-based claims (case transferred from N.D. Tex.) | Loan, or loan claim survives | “the Court assumes-without deciding and only for purposes of the instant motions to dismiss-the Factoring Agreement was a loan.” Opinion

Official Committee of Unsecured Creditors v. LG Funding, LLC (In re Cornerstone Tower Services, Inc.)
Bankr. No. BK16-40787; Adv. No. A17-4051, Doc. 23 (Bankr. D. Neb.); cited by later courts as 2018 WL 6199131 | U.S. Bankruptcy Court, District of Nebraska | 2018 | Bankruptcy adversary proceeding (preference) | True sale, not a loan | “Therefore, the court finds that the agreement in this case is properly classified as a sale rather than a loan.” Opinion

Gecker v. LG Funding, LLC (In re Hill)
589 B.R. 614 (Bankr. N.D. Ill. 2018) | U.S. Bankruptcy Court, Northern District of Illinois | 2018 | Bankruptcy adversary proceeding | True sale, not a loan | “Since these transactions are not considered loans under New York law, they cannot be criminally usurious.” Opinion

Champion Auto Sales, LLC v. Pearl Beta Funding, LLC
159 A.D.3d 507; 2018 NY Slip Op 01645 | N.Y. Supreme Court, Appellate Division, First Department | 2018 | Appeal from order granting funder's motion to dismiss complaint seeking to vacate a judgment by confession | True sale, not a loan | “The evidence demonstrates that the underlying agreement leading to the judgment by confession was not a usurious transaction” Opinion

Colonial Funding Network, Inc. v. Epazz, Inc.
252 F. Supp. 3d 274 (S.D.N.Y. 2017) | U.S. District Court, Southern District of New York | 2017 | Funder's motions to dismiss merchant's usury counterclaims and strike usury affirmative defense | True sale, not a loan | “TVT’s right to collect the receipts purchased amounts from Epazz is in fact contingent on Epazz’s continued collection of receipts.” Opinion

## How often courts see merchant cash advance cases

## What this means for a business that owes $500,000 or more

A credible argument that an advance is really a loan changes the funder's risk in court, and that changes what it will accept in a negotiation. But the argument depends on the exact contract, the state whose law governs it and the court that hears it, and many decisions in our sample went the funder's way. This is work for your own attorney. Our guide to MCA debt over $500,000 explains where it fits among the options.

## Method and limits

- Decisions were found through CourtListener's opinion search and through reporting on notable cases. Every outcome was classified from the opinion's own text, and each row quotes it.
 
- Many decisions are rulings on early motions; a usury claim surviving a motion to dismiss is not a final judgment that the advance was a loan.
 
- The sample is not every MCA case. Unpublished trial-court rulings, which are most of them, are not all searchable.
 
- Nothing here is legal advice.

## Questions and answers

### Is a merchant cash advance a loan?
It depends on the contract and the court. In our review of 59 decisions, 27 held an advance was a loan or let a usury claim proceed and 22 held it was a true sale. Courts mostly look at the reconciliation right, whether there is a fixed term, and whether the funder can collect even if the business fails.

### Can I sue a merchant cash advance company for usury?
Some owners have, and some courts have let those claims go forward, but the outcome depends on the specific agreement and the governing state's law. Talk to your own attorney before relying on it.

### What is a reconciliation provision?
A clause that lets the business ask the funder to adjust its payments to match actual receipts. Courts treat a real, mandatory reconciliation right as a sign the deal is a sale; one that is missing or left to the funder's discretion points toward a loan.

## Sources

- Apollo Funding Co. v. Dave Reilly Construction, LLC, 241 A.D.3d 1508; 2025 NY Slip Op 05055. courtlistener.com/opinion/10677061/apollo-funding-co-v-dave-reilly-con
 
- Black Pearl Vision, LLC v. G and G Funding Group, LLC, Bankr. No. 24-30948; Adv. Proc. No. 25-03143, Doc. 15 (Bankr. W.D.N.C.). courtlistener.com/opinion/10880639/in-re-black-pearl-vision-llc-v-g-an
 
- Black Pearl Vision, LLC v. Pearl Delta Funding, LLC, Bankr. No. 24-30928; AP No. 25-03111, Doc. 18 (Bankr. W.D.N.C.). courtlistener.com/opinion/10767772/in-re-black-pearl-vision-llc-v-pear
 
- Blade Funding, LLC v. Build Retail, Inc., 2026 NY Slip Op 05268. courtlistener.com/opinion/10975407/blade-funding-llc-v-build-retail-in
 
- Bridge Funding Cap LLC v. SimonExpress Pizza, LLC, 2025 NY Slip Op 04306; cited by later courts as 240 A.D.3d 1186. storage.courtlistener.com/html/2025/07/25/bridge_funding_cap_llc_v._si
 
- Butler Trucking LLC v. CashFloit, LLC, Bankr. No. 24-32443; Adv. Pro. No. 25-03004, Doc. 14 (Bankr. N.D. Ohio). courtlistener.com/opinion/10632802/butler-trucking-llc-v-cashfloit-llc
 
- CapCall, LLC v. Foster (In re Shoot the Moon, LLC), Bankr. No. 2:15-bk-60979-WLH; Adv. No. 2:17-ap-00028-WLH, Doc. 189 (Bankr. D. Mont.) (not for publication). courtlistener.com/opinion/9992496/cap-call-llc-v-foster/
 
- Champion Auto Sales, LLC v. Pearl Beta Funding, LLC, 159 A.D.3d 507; 2018 NY Slip Op 01645. nycourts.gov/reporter/3dseries/2018/2018_01645.htm
 
- Colonial Funding Network, Inc. v. Epazz, Inc., 252 F. Supp. 3d 274 (S.D.N.Y. 2017). static.case.law/f-supp-3d/252/cases/0274-01.json
 
- Crosby Tugs, L.L.C. v. Meged Funding Group (Aqua MCA Agreement) (In re Crosby Marine Transportation, LLC), Bankr. No. 26-10678; Adv. Case 26-01018, Doc. 324 (Bankr. E.D. La.). courtlistener.com/opinion/10876706/crosby-tugs-llc-crosby-dredging-llc
 
- Crosby Tugs, L.L.C. v. Meged Funding Group (Reliance MCA Agreement) (In re Crosby Marine Transportation, LLC), Bankr. No. 26-10678; Adv. Case 26-01018, Doc. 323 (Bankr. E.D. La.). courtlistener.com/opinion/10876701/crosby-tugs-llc-crosby-dredging-llc
 
- Crystal Springs Capital, Inc. v. Big Thicket Coin, LLC, 220 A.D.3d 745; 2023 NY Slip Op 05121. courtlistener.com/opinion/9432148/crystal-springs-capital-inc-v-big-th
 
- Culp v. Silverline Services, Inc., 2026 NY Slip Op 05077. courtlistener.com/opinion/10958818/culp-v-silverline-servs-inc/
 
- Davis v. Richmond Capital Group, LLC, 194 A.D.3d 516; 2021 NY Slip Op 03111. courtlistener.com/opinion/4884094/davis-v-richmond-capital-group-llc/
 
- Diesel Funding, LLC v. Build Retail, Inc., 2026 NY Slip Op 02629. courtlistener.com/opinion/10867093/diesel-funding-llc-v-build-retail-i
 
- Division 5, LLC v. Fora Financial Advance, LLC, No. 24-CV-6870 (JPO), ECF 31 (S.D.N.Y.). courtlistener.com/opinion/11019373/division-5-llc-v-fora-financial-adv
 
- EBF Holdings, LLC v. Defiant Arms, L.L.C., 251 A.D.3d 1448; 2026 NY Slip Op 04563. storage.courtlistener.com/html/2026/07/24/ebf_holdings_llc_v._defiant_
 
- Fleetwood Services, LLC v. Complete Business Solutions Group, Inc. (d/b/a Par Funding), 374 F. Supp. 3d 361 (E.D. Pa. 2019). static.case.law/f-supp-3d/374/cases/0361-01.json
 
- Fleetwood Services, LLC v. Ram Capital Funding, LLC, No. 20-cv-5120 (LJL), Dkt. 87 (S.D.N.Y.); cited by later courts as 2022 WL 1997207. courtlistener.com/opinion/11017289/fleetwood-services-llc-v-ram-capita
 
- Gecker v. LG Funding, LLC (In re Hill), 589 B.R. 614 (Bankr. N.D. Ill. 2018). static.case.law/br/589/cases/0614-01.json
 
- Greenwich Retail Group LLC v. Moby Capital, LLC (In re Greenwich Retail Group LLC), Adv. Proc. No. 25-01106 (MEW), Doc. 50 (Bankr. S.D.N.Y.) (for publication; cited by later courts as 677 B.R.). courtlistener.com/opinion/10797090/in-re-greenwich-retail-group-llc-v-
 
- Guttman v. EBF Holdings, LLC (In re Global Energy Services, LLC), Bankr. No. 21-17305-NVA; Adv. No. 23-00188, Doc. 42 (Bankr. D. Md.); cited by later courts as 2025 WL 1012721. courtlistener.com/opinion/10369271/guttman-v-ebf-holdings-llc/
 
- Haymount Urgent Care PC v. GoFund Advance, LLC, 609 F. Supp. 3d 237 (S.D.N.Y. 2022) (No. 1:22-cv-01245-JSR, ECF 86). courtlistener.com/opinion/9875595/haymount-urgent-care-pc-v-gofund-adv
 
- Heritage Collegiate Apparel, Inc. v. Elemental Capital, Inc., Bankr. No. 24-47922; Adv. No. 25-4146, Doc. 50 (Bankr. E.D. Mich.). courtlistener.com/opinion/10777061/heritage-collegiate-apparel-inc-v-e
 
- JLK Construction, LLC v. Alva Advance, LLC, Bankr. No. 23-50034; Adv. No. 23-4030, Doc. 93 (Bankr. W.D. Mo.). courtlistener.com/opinion/10761245/jlk-construction-llc-v-alva-advance
 
- Kapitus Servicing, Inc. v. Point Blank Construction, Inc., 221 A.D.3d 532; 2023 NY Slip Op 06087. courtlistener.com/opinion/9447246/kapitus-servicing-inc-v-point-blank-
 
- Kapitus Servicing, Inc. v. Ragtime Gourmet Corp., 242 A.D.3d 638; 2025 NY Slip Op 05921. courtlistener.com/opinion/10712706/kapitus-servicing-inc-v-ragtime-gou
 
- Kapitus Servicing, Inc. v. Southern Source, Inc., 2026 NY Slip Op 05855. courtlistener.com/opinion/11017540/kapitus-servicing-inc-v-southern-so
 
- Kapitus Servicing, Inc. v. Suburban Waste Services, Inc., 246 A.D.3d 661; 2026 NY Slip Op 01127. storage.courtlistener.com/html/2026/02/26/kapitus_servicing_inc._v._su
 
- Kurtz v. BMT Capital Group, Inc., Adv. No. 25-06035-NGH, Doc. 31 (Bankr. D. Idaho). courtlistener.com/opinion/10841210/timothy-r-kurtz-v-bmt-capital-group
 
- Kurtz v. Kalamata Capital Group, LLC, Adv. No. 25-06027-NGH, Doc. 28 (Bankr. D. Idaho). courtlistener.com/opinion/10777700/timothy-r-kurtz-v-kalamata-capital-
 
- LG Funding, LLC v. United Senior Properties of Olathe, LLC, 181 A.D.3d 664; 122 N.Y.S.3d 309; 2020 NY Slip Op 01607. courtlistener.com/opinion/4734849/lg-funding-llc-v-united-senior-props
 
- Lateral Recovery LLC v. Funderz.net, LLC, No. 1:22-cv-02170 (JLR), ECF 140 (S.D.N.Y.). courtlistener.com/opinion/9890854/lateral-recovery-llc-v-bmf-advance-l
 
- Lateral Recovery LLC v. Funderz.net, LLC, No. 22-cv-2170 (LJL), Dkt. 169 (S.D.N.Y.). courtlistener.com/opinion/11019214/lateral-recovery-llc-benchmark-buil
 
- Lateral Recovery, LLC v. Capital Merchant Services, LLC, 632 F. Supp. 3d 402 (S.D.N.Y. 2022) (No. 21-cv-9336 (LJL), Dkt. 49). courtlistener.com/opinion/11017573/lateral-recovery-llc-et-al-v-capita
 
- Lateral Recovery, LLC v. Queen Funding, LLC, No. 1:21-cv-09607-LGS, ECF 36 (S.D.N.Y.). courtlistener.com/opinion/9876185/lateral-recovery-llc-v-queen-funding
 
- Mazzoni Center v. LCF Group, Inc., No. 2:24-cv-05921-KSM, Doc. 20 (E.D. Pa.). courtlistener.com/opinion/10276970/mazzoni-center-v-lcf-group-inc/
 
- Merchant Advance, LLC v. Conceptos Cuisine, LLC, 2026 TSPR 15; 217 DPR ___ (No. CC-2025-0109). courtlistener.com/opinion/10793909/merchant-advance-llc-v-conceptos-cu
 
- O'Toole v. Radium2 Capital, LLC (In re J.P.R. Mechanical Inc.), Bankr. No. 19-23480 (DSJ); Adv. Pro. Nos. 21-07079 and 21-07082 (DSJ), Doc. 46 (Bankr. S.D.N.Y.) (not for publication). courtlistener.com/opinion/10595832/otoole-solely-in-her-capacity-chapt
 
- Oakshire Properties, LLC v. Argus Capital Funding, LLC, 229 A.D.3d 1199; 2024 NY Slip Op 03943. courtlistener.com/opinion/10015571/oakshire-props-llc-v-argus-capital-
 
- Official Committee of Unsecured Creditors v. LG Funding, LLC (In re Cornerstone Tower Services, Inc.), Bankr. No. BK16-40787; Adv. No. A17-4051, Doc. 23 (Bankr. D. Neb.); cited by later courts as 2018 WL 6199131. courtlistener.com/opinion/9992801/official-committee-of-unsecured-cred
 
- OriginClear Inc. v. GTR Source, LLC, No. 20-CV-7026-FPG, ECF 26 (W.D.N.Y.); cited by later courts as 2021 WL 5907878. courtlistener.com/opinion/9897855/originclear-inc-v-gtr-source-llc/
 
- Paycation Travel, Inc. v. Global Merchant Cash, Inc., 2021 NY Slip Op 01782. courtlistener.com/opinion/4867282/paycation-travel-inc-v-global-mercha
 
- People v. Richmond Capital Group LLC, 2023 NY Slip Op 50975(U). courtlistener.com/opinion/9426876/people-v-richmond-capital-group-llc/
 
- People v. Richmond Capital Group LLC, 2026 NY Slip Op 00990. courtlistener.com/opinion/10796696/people-v-richmond-capital-group-llc
 
- People v. Yellowstone Capital LLC, 2026 NY Slip Op 30767(U). courtlistener.com/opinion/10812597/people-v-yellowstone-capital-llc/
 
- Principis Capital, LLC v. I Do, Inc., 201 A.D.3d 752; 160 N.Y.S.3d 325; 2022 NY Slip Op 00203. nycourts.gov/reporter/3dseries/2022/2022_00203.htm
 
- Samson MCA LLC v. Across the Street Holdings, Inc., No. 6:24-CV-06601 EAW, Dkt. 32 (W.D.N.Y.). courtlistener.com/opinion/10978770/samson-mca-llc-v-across-the-street-
 
- Samson MCA LLC v. Joseph A. Russo M.D. P.C./IV Therapeutics PLLC (appeal No. 2), 219 A.D.3d 1126; 2023 NY Slip Op 04271. storage.courtlistener.com/html/2023/08/11/samson_mca_llc_v._joseph_a._
 
- Slate Advance v. Saygan Global Steel, Ltd., 206 A.D.3d 782; 2022 NY Slip Op 03761. courtlistener.com/opinion/6475922/slate-advance-v-saygan-global-steel-
 
- Sommers v. Global Merchant Cash, Inc. (In re Anadrill Directional Services Inc.), Bankr. No. 23-31199; Adv. No. 25-3039, Doc. 27 (Bankr. S.D. Tex.). courtlistener.com/opinion/10780987/in-re-anadrill-directional-services
 
- Spin Capital, LLC v. Bridgelink Engineering, LLC, 2026 NY Slip Op 02296. courtlistener.com/opinion/10849417/spin-capital-llc-v-bridgelink-engg-
 
- Strategic Funding Source, Inc. v. Steenbok, Inc., 2021 NY Slip Op 04002. courtlistener.com/opinion/4893742/strategic-funding-source-inc-v-steen
 
- The New Y-Capp, Inc. v. Arch Capital Funding, LLC, No. 18-cv-3223 (ALC), ECF 208 (S.D.N.Y.); cited by later courts as 2022 WL 4813962. courtlistener.com/opinion/9878389/the-new-y-capp-inc-v-arch-capital-fu
 
- Togut v. eProdigy Financial, LLC (In re Kossoff PLLC), Bankr. No. 21-10699 (DSJ); Adv. Pro. No. 23-01109 (DSJ), Doc. 103 (Bankr. S.D.N.Y.); cited by later courts as 2026 WL 2168916. courtlistener.com/opinion/10942296/in-re-kossoff-pllc-v-eprodigy-finan
 
- True Business Funding, LLC v. Guerrero A Construction Corp., 239 A.D.3d 787; 2025 NY Slip Op 03598. courtlistener.com/opinion/10624889/true-bus-funding-llc-v-guerrero-a-c
 
- US Information Group LLC v. EBF Holdings, LLC, No. 1:22-cv-06661-PKC, ECF 76 (S.D.N.Y.); cited by later courts as 2023 WL 6198803. courtlistener.com/opinion/9887931/us-information-group-llc-v-ebf-holdi
 
- Weigle v. CFG Merchant Solutions, LLC (In re Squared Up Hospitality, Inc.), Bankr. No. 4:23-bk-03540-BMW; Adv. No. 4:24-ap-00208-BMW, Doc. 139 (Bankr. D. Ariz.). courtlistener.com/opinion/11008859/in-re-squared-up-hospitality-inc-v-
 
- Williams Land Clearing, Grading, and Timber Logger, LLC v. Apex Funding Source LLC, Bankr. No. 22-02094-5-PWM; Adv. No. 23-00024-5-PWM, Doc. 119 (Bankr. E.D.N.C.). courtlistener.com/opinion/10585912/williams-land-clearing-grading-and-
 
- CourtListener, Free Law Project (search API). courtlistener.com

About this study

Decisions were found through CourtListener's opinion search and through reporting on notable cases, and every outcome was classified from the opinion's own text. The dataset is a reviewed sample, not every MCA case ever decided: many trial-court rulings are never published.

How to cite: Hamilton & Merchant Research, “How Courts Decide Whether a Merchant Cash Advance Is a Loan,” October 9, 2026, https://hamiltonmerchant.com/research/mca-court-decisions/

Download the data (CSV) · Free to reuse with attribution under CC BY 4.0. Found an error? Email info@hamiltonmerchant.com and we will correct it and date the change.

# Government Actions Against Merchant Cash Advance Companies

URL: https://hamiltonmerchant.com/research/mca-enforcement-actions/
Updated: October 9, 2026

Regulators have brought two kinds of cases against merchant cash advance companies: cases that protect the businesses that took the advances, and cases against operators that defrauded the investors who funded them. We verified 18 actions from an official source, 6 of the first kind and 12 of the second.

Key findings

- We verified 18 government actions against merchant cash advance companies and their principals, filed from 2018 to 2026. 6 protected merchants who took advances; 12 targeted companies that defrauded their own investors or only claimed to make advances.
 
- The merchant-protection cases produced $1.21 billion in announced judgments and settlements ($1.13 billion still standing after an appeal), including $556.3 million in merchant balances canceled.
 
- The largest: the New York Attorney General's 2025 consent judgment against Yellowstone Capital, $1.065 billion, of which $534.6 million was satisfied by canceling merchants' balances.
 
- Criminal cases against MCA operators who defrauded investors sentenced 11 people to a combined 98.4 years, with restitution orders of at least $478 million.
 
- 8 of the 18 actions are still pending, and we found no Federal Trade Commission merchant cash advance case filed after 2020.

## Which regulators have acted against merchant cash advance companies?

On the merchant side, the Federal Trade Commission, the New York Attorney General and the New Jersey Attorney General. On the investor side, the Securities and Exchange Commission, federal prosecutors and state securities regulators in Pennsylvania and New Jersey. We found no district attorney usury prosecution and no action against an MCA broker or a business debt relief seller.

## Cases that protected merchants

These cases alleged that funders took more than their contracts allowed, misrepresented costs and terms, charged rates far above usury limits while calling the deal a purchase, or used confessions of judgment, threats and a captive arbitration forum to collect.

Government actions protecting businesses that took merchant cash advances

Filed | Agency | Case | What was alleged | Outcome | Amounts announced | Source

2026 | New York State Attorney General | People of the State of New York v. Rapid Ruling, Zachary Meyer and Andrew Sachs | Presented as a neutral arbitration forum but built with an MCA company and run on rules it drafted; ruled for the MCA company in nearly all of about 3,000 arbitrations, feeding court judgments against small businesses. | pending | — | Source

2024 | New York State Attorney General | People of the State of New York v. Yellowstone Capital LLC et al. (incl. Delta Bridge Funding / Cloudfund) | MCAs were illegal loans with annual rates up to 820%, plus fraudulent fees; the operation continued as Delta Bridge/Cloudfund from 2021. | settlements (five individuals, 2024) and consent judgment (Yellowstone entities, Stern, Reece, 2025); pending as to remaining defendants | $1.07 billion judgment or settlement; $534.6 million balances canceled; $19.5 million restitution | Source

2020 | New Jersey Office of the Attorney General / Division of Consumer Affairs | New Jersey Attorney General and Division of Consumer Affairs v. Yellowstone Capital LLC et al. | Disguised high-interest loans as receivables purchases, with interest far above New Jersey's usury caps, plus unlawful servicing and collection practices. | settlement (administrative consent order) | $27.4 million judgment or settlement; $21.8 million balances canceled | Source

2020 | Federal Trade Commission (FTC) | FTC v. Yellowstone Capital LLC et al. | Kept withdrawing payments from merchants' bank accounts after balances were paid off and misrepresented fees, collateral and personal-guarantee terms. | settlement (stipulated order for permanent injunction and monetary judgment) | $9.8 million judgment or settlement; $9.8 million restitution | Source

2020 | Federal Trade Commission (FTC) | FTC v. RCG Advances, LLC (f/k/a Richmond Capital Group) et al. | Misrepresented MCA terms and fees, made unauthorized withdrawals, threatened violence, and misused confessions of judgment to seize personal and business assets. | settlements (Ram Capital Funding and Reich, Jan 2022; RCG Advances and Giardina, June 2022) and judgment after summary judgment and the FTC's first jury trial (Braun, Feb 2024) | $23.8 million judgment or settlement; $6.8 million restitution | Source

2020 | New York State Attorney General | People of the State of New York v. Richmond Capital Group LLC et al. | MCAs were disguised loans with annual rates regularly above 200% and often above 1,000%, plus undisclosed fees, threats, and false affidavits used to obtain judgments. | judgment for the State (Sept 2023 summary determination; money judgment entered 2024-04-11); on appeal, liability affirmed and money judgment vacated and remanded (2026-02-19) | $77.3 million judgment or settlement | Source

## Cases against companies that defrauded investors

These cases involved merchant cash advance companies, or schemes that only claimed to make advances, that raised money from investors with false promises. Some also involved threats against merchants to collect.

Government actions against MCA operators that defrauded investors

Filed | Agency | Case | What was alleged | Outcome | Amounts announced | Source

2026 | U.S. Securities and Exchange Commission (SEC) | SEC v. Jacob Garfinkel, 5G Funding LLC and Five G Funding LLC | Investment fraud through 5G Funding's merchant cash advance business; about $4.5 million raised from at least 23 investors. | pending | — | Source

2025 | U.S. Securities and Exchange Commission (SEC) | SEC v. Joel J. Natario and Jefferson Scott (a/k/a 'Patch') Baker | Ran a $10 million Ponzi scheme from about 23 investors through a purported MCA venture that never made any MCAs. | pending | — | Source

2025 | U.S. Department of Justice, U.S. Attorney's Office for the Southern District of Florida | United States v. Pablo Silverio Rebollido (E-Card Lending LLC / E-Card Merchant LLC) | Investment Ponzi scheme disguised as an MCA business; more than 70 investors, losses over $40 million. | guilty plea (wire fraud); prison sentence and restitution | $16.0 million restitution | Source

2025 | U.S. Securities and Exchange Commission (SEC) | SEC v. David J. Feingold, Joseph B. Baldassarra, Steven S. Baldassarra, Broad Street Global Management, LLC and Broad Street Inc. | Raised about $1 billion from over a thousand investors and claimed merchant cash advance investments generated significant profits when they did not. | pending | — | Source

2023 | U.S. Department of Justice, U.S. Attorney's Office for the Eastern District of Pennsylvania | United States v. Complete Business Solutions Group, Inc. d/b/a Par Funding, Joseph LaForte, Lisa McElhone, Joseph Cole Barleta and James LaForte | RICO conspiracy, securities and wire fraud against investors who funded Par Funding's MCAs; threats of violence to collect from MCA customers; tax crimes, perjury and obstruction. | guilty pleas and convictions (individuals 2024; company 2026); prison sentences, restitution and forfeiture | $314 million restitution | Source

2022 | U.S. Department of Justice, U.S. Attorney's Office for the Southern District of Florida | United States v. Johanna Michely Garcia (and Pavel Ramon Ruiz Hernandez) | Mail and wire fraud conspiracy in a Ponzi scheme of about $190.7 million that claimed to fund merchant cash advances; investors lost nearly $90 million. | guilty pleas and convictions; prison sentences | — | Source

2021 | U.S. Securities and Exchange Commission (SEC) | SEC v. MJ Capital Funding, LLC, MJ Taxes and More, Inc. and Johanna M. Garcia (plus related SEC actions) | Ponzi scheme pitched as merchant cash advance investments: raised at least $70 million (later described as $196 million) but made at most $2.9 million in MCA loans. | consent judgment (Garcia); asset freeze and receiver; related settlements | $4.1 million judgment or settlement | Source

2020 | U.S. Securities and Exchange Commission (SEC) | SEC v. Complete Business Solutions Group, Inc. d/b/a Par Funding et al. | Raised nearly half a billion dollars from about 1,200 investors through unregistered notes with false statements, to fund small-business advances some charging over 400% interest. | judgments (consent and litigated) against principals and agents; disgorgement affirmed on appeal (2024) | $228.9 million judgment or settlement | Source

2019 | U.S. Department of Justice, U.S. Attorney's Office for the Southern District of Florida | United States v. Carl R. Ruderman and related 1 Global Capital prosecutions | Securities-fraud conspiracy: investors in 1 Global's merchant cash advance business were told of audited financials and double-digit returns while money was diverted. | guilty pleas and convictions; prison sentences | $148 million restitution | Source

2018 | New Jersey Bureau of Securities (Office of the Attorney General) | New Jersey Bureau of Securities cease and desist order against Complete Business Solutions Group (Par Funding) | Sold unregistered securities to fund its small-business cash advances, including more than $8 million to at least 29 New Jersey investors. | administrative cease and desist order (effective immediately) | — | Source

2018 | Pennsylvania Department of Banking and Securities (DoBS) | Pennsylvania Department of Banking and Securities consent order with Complete Business Solutions Group (Par Funding) | Pennsylvania securities-law matter over CBSG's sale of notes used to fund its cash advances (violation details not verified; Pennsylvania order not opened). | consent order | $499,000 judgment or settlement | Source

2018 | U.S. Securities and Exchange Commission (SEC) | SEC v. 1 Global Capital LLC and Carl Ruderman (plus related SEC actions against 1 Global officers) | Florida MCA company raised more than $287 million (later $322 million) from 3,400+ retail investors with false claims about returns and use of funds. | consent judgment (Ruderman); consented settlements by two officers in 2022 (subject to court approval) | $47.0 million judgment or settlement | Source

## What this means for a business that owes $500,000 or more

Most merchant cash advance companies have never been the subject of a government action, and these cases do not show that any other funder broke the law. But if one of your funders appears here, read the order: the Yellowstone settlements canceled merchants' balances and ended collections, and some orders vacated judgments and released liens. The conduct these cases describe, such as debits beyond the contract, refused reconciliations and misstated costs, is worth checking for in your own statements with your attorney. Our court decisions study covers private lawsuits, and our guide to MCA debt over $500,000 explains the options.

## Method and limits

- Actions were found in agency newsrooms and court records and are listed only when an official source confirms them; related dockets by the same agency against the same company count as one action. Each row links to its source.
 
- Amounts are as announced. Judgments are often partly suspended or never fully collected, and civil and criminal amounts overlap, so we do not add them together.
 
- Two California orders could not be confirmed from the regulator's own site and are not included.
 
- Nothing here is legal advice.

## Questions and answers

### Has the government taken action against merchant cash advance companies?
Yes. We verified 18 actions since 2018. 6 protected merchants and produced $1.21 billion in announced judgments and settlements, including $556.3 million in merchant balances canceled.

### What did the New York Attorney General's Yellowstone Capital settlement do?
The 2025 consent judgment was for $1.065 billion, of which about $534.6 million was satisfied by canceling merchants' balances; it also banned the settling companies and officers from the merchant cash advance industry.

### What should I do if my funder was the subject of a government action?
Read the order or settlement linked on this page; some canceled balances, ended collections or released liens. An attorney can tell you whether it applies to your contract.

## Sources

- SEC v. 1 Global Capital LLC and Carl Ruderman (plus related SEC actions against 1 Global officers). sec.gov/enforcement-litigation/litigation-releases/lr-24249
 
- Pennsylvania Department of Banking and Securities consent order with Complete Business Solutions Group (Par Funding). njoag.gov/new-jersey-bureau-of-securities-orders-philadelphia-based-sm
 
- New Jersey Bureau of Securities cease and desist order against Complete Business Solutions Group (Par Funding). njoag.gov/new-jersey-bureau-of-securities-orders-philadelphia-based-sm
 
- United States v. Carl R. Ruderman and related 1 Global Capital prosecutions. justice.gov/usao-sdfl/pr/former-chairman-1-global-sentenced-five-years
 
- FTC v. RCG Advances, LLC (f/k/a Richmond Capital Group) et al.. ftc.gov/legal-library/browse/cases-proceedings/192-3252-rcg-advances-l
 
- People of the State of New York v. Richmond Capital Group LLC et al.. nycourts.gov/reporter/3dseries/2026/2026_00990.htm
 
- SEC v. Complete Business Solutions Group, Inc. d/b/a Par Funding et al.. sec.gov/enforcement-litigation/litigation-releases/lr-24860
 
- FTC v. Yellowstone Capital LLC et al.. ftc.gov/legal-library/browse/cases-proceedings/182-3202-yellowstone-ca
 
- New Jersey Attorney General and Division of Consumer Affairs v. Yellowstone Capital LLC et al.. njoag.gov/ag-grewal-files-suit-against-yellowstone-capital-llc-and-ass
 
- SEC v. MJ Capital Funding, LLC, MJ Taxes and More, Inc. and Johanna M. Garcia (plus related SEC actions). sec.gov/newsroom/press-releases/2021-151
 
- United States v. Johanna Michely Garcia (and Pavel Ramon Ruiz Hernandez). justice.gov/usao-sdfl/pr/leader-200-million-ponzi-scheme-sentenced-20-
 
- United States v. Complete Business Solutions Group, Inc. d/b/a Par Funding, Joseph LaForte, Lisa McElhone, Joseph Cole Barleta and James LaForte. justice.gov/usao-edpa/pr/par-funding-principals-charged-securities-fra
 
- People of the State of New York v. Yellowstone Capital LLC et al. (incl. Delta Bridge Funding / Cloudfund). ag.ny.gov/press-release/2025/attorney-general-james-announces-1-billio
 
- SEC v. David J. Feingold, Joseph B. Baldassarra, Steven S. Baldassarra, Broad Street Global Management, LLC and Broad Street Inc.. sec.gov/enforcement-litigation/litigation-releases/lr-26289
 
- United States v. Pablo Silverio Rebollido (E-Card Lending LLC / E-Card Merchant LLC). justice.gov/usao-sdfl/pr/miami-man-sentenced-more-19-years-prison-40-m
 
- SEC v. Joel J. Natario and Jefferson Scott (a/k/a 'Patch') Baker. sec.gov/enforcement-litigation/litigation-releases/lr-26311
 
- People of the State of New York v. Rapid Ruling, Zachary Meyer and Andrew Sachs. ag.ny.gov/press-release/2026/attorney-general-james-sues-sham-arbitrat
 
- SEC v. Jacob Garfinkel, 5G Funding LLC and Five G Funding LLC. sec.gov/enforcement-litigation/litigation-releases/lr-26651

About this study

Built from agency press releases, complaints and court orders. Amounts are as the agencies announced them; a judgment is not money collected, and civil and criminal amounts overlap, so they are reported separately and never added together.

How to cite: Hamilton & Merchant Research, “Government Actions Against Merchant Cash Advance Companies,” October 9, 2026, https://hamiltonmerchant.com/research/mca-enforcement-actions/

Download the data (CSV) · Free to reuse with attribution under CC BY 4.0. Found an error? Email info@hamiltonmerchant.com and we will correct it and date the change.

# What a $500,000 Merchant Cash Advance Stack Costs

URL: https://hamiltonmerchant.com/research/mca-stack-cost-model/
Updated: October 8, 2026

Owners who call us with half a million dollars or more in merchant cash advances almost never know their weekly number. They know each funder's debit, and they know the account is empty by Thursday. This model adds the stack up the way the bank account feels it, then asks the question that decides what happens next: how much revenue does it take for the business to carry it?

Key findings

- A business that owes about $557,000 across five merchant cash advances pays $5,033 every business day: $25,166 a week and $105,698 a month.
 
- For net profit alone to cover those debits, the business needs about $1.2 million a month in revenue at the 8.56% average net margin of U.S. non-financial companies, and about $2.8 million a month at trucking's 3.79% average.
 
- Priced as APR-equivalents, the five advances run from 63% to 205%. The later, smaller advances cost the most.
 
- In six months the daily debit grew 3.8 times ($1,339 to $5,033) while the cash received grew 2.5 times ($250,000 to $625,000).
 
- Scaled to other balances, every $500,000 owed in a stack shaped like this one costs about $22,600 a week; $1,000,000 costs about $45,200 a week.

## How the model works

The model follows one illustrative business through five advances. It takes a first advance of $250,000 in month zero, then four more over the next six months as the debits squeeze cash. Each later advance is smaller, priced higher and shorter, which is the pattern stacking usually follows because each funder prices the risk it sees in the bank statements, including the debits already going out.

Every advance is repaid by a fixed debit every business day. The model uses 21 business days a month and 252 a year, the same conventions as our MCA cost calculator. The APR-equivalent is the daily rate that makes the stream of debits worth the cash advanced, multiplied by 252. The model leaves out origination and underwriting fees, which many contracts deduct at funding; including them would push every APR-equivalent higher.

The snapshot is taken in month six, the month the fifth advance funds. That is the point where all five debits run at once and the balance owed is at its highest.

## The five advances

The modeled stack, with the balance still owed in month six

Position | Month funded | Cash received | Factor rate | Term | Payback | Daily debit | APR-equivalent | Owed in month 6

Advance 1 | Month 0 | $250,000 | 1.35 | 12 months | $337,500 | $1,339 | 63% | $168,750

Advance 2 | Month 2 | $150,000 | 1.40 | 9 months | $210,000 | $1,111 | 95% | $116,667

Advance 3 | Month 4 | $100,000 | 1.45 | 7 months | $145,000 | $986 | 136% | $103,571

Advance 4 | Month 5 | $75,000 | 1.49 | 6 months | $111,750 | $887 | 171% | $93,125

Advance 5 | Month 6 | $50,000 | 1.49 | 5 months | $74,500 | $710 | 205% | $74,500

Stack | | $625,000 | | | $878,750 | $5,033 | | $556,613

Together the five advances put $625,000 in the account and require $878,750 back, a cost of $253,750. In month six the business still owes $556,613.

## How much does a $500,000 MCA stack cost each day?

In this model, $5,033 every business day. That is $25,166 a week and $105,698 a month. Of each month's debits, about $31,412 is the cost of the money and about $74,286 repays the cash advanced.

That split matters. The cash advanced was spent on payroll, inventory, fuel or an earlier funder, so it is gone. Repaying it has to come from profit, from savings, or from new borrowing. A business that cannot cover the whole debit out of profit is shrinking its cash every week the stack runs, and the usual way to refill the account is the next advance.

## How much revenue does it take to carry the stack?

The test is simple: divide the monthly debits by the business's net margin. The answer is the monthly revenue at which profit alone would cover the debits without drawing down cash or borrowing again. The table uses each industry's average net margin from NYU Stern's January 2026 data set.

Revenue needed for net profit to cover $105,698 a month in debits

Industry | Companies in average | Average net margin | Monthly revenue needed | Annual revenue needed

Trucking | 26 | 3.79% | $2,789,000 | $33,470,000

Engineering and construction | 48 | 5.94% | $1,779,000 | $21,350,000

Restaurants | 64 | 9.37% | $1,128,000 | $13,540,000

Auto dealers and parts retail | 34 | 3.36% | $3,146,000 | $37,750,000

Business and consumer services | 155 | 7.03% | $1,504,000 | $18,040,000

Healthcare support services | 104 | 1.25% | $8,456,000 | $101,470,000

All U.S. non-financial companies | 4822 | 8.56% | $1,235,000 | $14,820,000

These margins come from public companies, which are larger and usually more profitable than the businesses that take merchant cash advances. A trucking company at its industry's average 3.79% margin would need about $2.8 million a month, roughly $33 million a year, before profit could carry this stack. Most businesses that owe this much to funders are far smaller than that, which is why the debits come out of working capital, tax deposits and payroll instead.

## Debits as a share of revenue

Share of monthly revenue taken by the stack's debits

Monthly revenue | Debits as a share of revenue

$500,000 | 21.1%

$1,000,000 | 10.6%

$2,000,000 | 5.3%

$3,000,000 | 3.5%

At $1,000,000 a month in revenue, the stack takes 10.6% of every dollar that comes in. For most businesses that is more than their entire profit margin.

## Why stacks grow faster than the cash they bring in

The first advance in the model costs $1,339 a day for $250,000 of cash. The fifth costs $710 a day for $50,000. Per dollar received, the fifth advance's daily debit is 2.6 times the first one's, because it is priced higher and repaid over less than half the time.

That is how the stack's daily debit grows 3.8 times in six months while the cash received grows only 2.5 times. Each new advance solves this week's shortfall by making every later week worse. Our guide to MCA stacking walks through the same spiral from the owner's side.

## Scaling the model to other balances

If the mix of prices and terms stays the same, the debits scale with the balance owed. In this model the weekly debit is 4.52% of the balance owed in month six.

Weekly debits and revenue needed, by balance owed (same stack shape)

Balance owed | Weekly debits | Monthly debits | Revenue needed at 10% margin | Revenue needed at 5% margin

$250,000 | $11,300 | $47,500 | $475,000 | $949,000

$500,000 | $22,600 | $94,900 | $949,000 | $1,899,000

$750,000 | $33,900 | $142,400 | $1,424,000 | $2,848,000

$1,000,000 | $45,200 | $189,900 | $1,899,000 | $3,798,000

$1,500,000 | $67,800 | $284,800 | $2,848,000 | $5,697,000

$2,000,000 | $90,400 | $379,800 | $3,798,000 | $7,596,000

## Run your own stack

Enter what each funder is still owed and what it takes out, daily or weekly. The calculator runs in your browser and sends nothing to us. It starts filled in with the model's five positions.

Your positions

Funder | Balance still owed | Payment | How often

 Add a funder

 Average monthly revenue
 Net profit margin before the advances (%)

- Total still owed$0
 
- Debits per week$0
 
- Debits per month$0
 
- Share of monthly revenue0%
 
- Monthly net profit at that margin$0
 
- Monthly shortfall the profit does not cover$0
 
- Months until the last funder is paid at this pace0
 
 Months use 21 business days or 4.33 weeks. Estimates only; default fees, renewals and reconciliations change the real numbers.

## Limits of this model

- It is one illustrative stack, not a sample of real contracts. Real factor rates, terms and fees vary by funder and by business.
 
- Some advances collect a percentage of card sales instead of a fixed debit. Many contracts also allow a reconciliation that lowers payments when sales fall; the model assumes fixed debits because that is how most of the stacks we see are collected.
 
- Industry margins are public-company averages. A small private business in the same industry may earn more or less.
 
- Nothing here is legal, tax or accounting advice.

## What owners carrying a stack this size can do

A stack this size is rarely fixed by one more advance. The paths that work at this size are a coordinated restructuring with every funder at once, a negotiated settlement paid from a sale, new equity or long-term debt, and in some cases a Subchapter V bankruptcy handled by a bankruptcy attorney. Our guide to MCA debt over $500,000 explains how each one works. For a free, confidential first conversation about your own stack, call (407) 993-1416.

## Questions and answers

### How much does a $500,000 merchant cash advance stack cost per day?
In our model, a five-position stack that owes about $557,000 debits $5,033 every business day, or $25,166 a week. Scaled to the same shape, every $500,000 owed costs about $22,600 a week. Your own number depends on each contract's payment and term.

### How much revenue does a business need to carry a $500,000 MCA stack?
For net profit alone to cover the debits in our model, about $1.2 million a month at the 8.56% average net margin of U.S. non-financial companies, or about $949,000 a month at a 10 percent margin per $500,000 owed. Businesses below that level pay the debits out of working capital.

### Why do merchant cash advance stacks keep growing?
Each later advance is usually smaller, priced higher and repaid over a shorter term, so it adds more daily debit per dollar received than the one before. The new cash covers this week's shortfall and makes every later week tighter, which leads to the next advance.

### What is the APR on a merchant cash advance stack?
In our model the five advances range from about 63% to 205% as APR-equivalents, before any fees deducted at funding. Merchant cash advances are not loans and do not state an APR unless a state disclosure law requires an estimate, so the figure is a comparison tool, not a contract rate.

## Sources

- Aswath Damodaran, NYU Stern School of Business, “Operating and Net Margins by Industry Sector (US),” data as of January 2026. pages.stern.nyu.edu
 
- Hamilton & Merchant, MCA cost calculator (method for the APR-equivalent). hamiltonmerchant.com/mca-calculator/

About this study

An illustrative model, not a survey of real contracts. Five advances are priced inside the factor-rate range published by the sources below, with daily debits over 21 business days a month. Industry margins are public-company averages from NYU Stern (data as of January 2026).

How to cite: Hamilton & Merchant Research, “What a $500,000 Merchant Cash Advance Stack Costs,” October 8, 2026, https://hamiltonmerchant.com/research/mca-stack-cost-model/

Download the data (CSV) · Free to reuse with attribution under CC BY 4.0. Found an error? Email info@hamiltonmerchant.com and we will correct it and date the change.

# MCA Debt Over $500,000

URL: https://hamiltonmerchant.com/get-information/mca-debt-over-500k/

A business that owes more than $500,000 in merchant cash advances, usually to several funders at once, has four realistic ways out: a coordinated restructuring with every funder; settlements paid for with a sale, new equity or long-term debt; a court-supervised reorganization such as Subchapter V; or an orderly wind-down. Which one fits depends on one question: does the business earn enough before the debits to carry a smaller payment?

The numbers at this size

- In Hamilton & Merchant's published stack model, every $500,000 owed across five advances is debited about $22,600 a week, and $1,000,000 about $45,200 a week. (The model.)
 
- At a 10% net margin, profit alone covers the debits on $500,000 owed only when monthly revenue reaches about $949,500.
 
- 7 of the 11 state laws that require disclosures for merchant cash advances stop at $500,000 or less, so above that size most owners get no state-required disclosure at all (state survey).
 
- A business can use Subchapter V, the faster Chapter 11 for small businesses, only if its qualifying debts are no more than $3,424,000 (cases filed on or after April 1, 2025). A bill to raise the limit to $7.5 million passed Congress in September 2026 but was not law as of October 9, 2026.

This guide is for owners at that size. It explains what changes above $500,000, how each way out works, how to tell which one fits, and what to have ready before you talk to anyone. Hamilton & Merchant is not a law firm and nothing here is legal advice; where a step needs a lawyer, it says so.

## What changes when the balance passes $500,000?

The mechanics of each advance are the same as on a $50,000 advance: a purchased amount, a fixed daily or weekly debit, a personal guarantee, a UCC filing. What changes is the scale and the number of moving parts.

- The weekly drain. Debits in the tens of thousands of dollars a week leave every Monday through Friday whether the week was good or bad. In the stack model, the debits on about $557,000 owed come to $25,166 a week.
 
- Several funders at once. Five or more contracts, each with its own reconciliation clause, guarantee, default terms, venue clause and lien, have to be handled together. A deal with one funder frees cash that the next funder's debit takes. See how to restructure multiple merchant cash advances at once.
 
- Fewer state protections. Of the 11 states with merchant cash advance laws in force, 7 cover only deals of $500,000 or less. Only Louisiana (no dollar cap); New York (up to $2.5 million); Texas (under $1 million); Utah (up to $1 million) reach larger deals. See our survey of state MCA laws.
 
- Customers in the line of fire. Funders with rights in your receivables can send your customers a notice to pay them instead of you. For a business that bills other businesses, that can stall the cash that would fund any plan. See when a funder contacts your customers, and the guides for trucking companies and construction companies.
 
- Court-supervised options, within a limit. Subchapter V is available when the business's noncontingent, liquidated debts total no more than $3,424,000 and at least half come from the business (11 U.S.C. 101(51D); U.S. Trustee Program). Filing stops collection actions, including enforcement of judgments, under the automatic stay (11 U.S.C. 362(a)). Whether a funder's claimed receivables are protected depends on whether the court treats the advance as a sale or a loan.

## The four ways out

Ways out of a merchant cash advance stack over $500,000

Path | What happens | Who usually runs it | What it needs | Main risk

Coordinated restructuring | Every funder's terms change at once: lower or paused debits, longer terms, a written forbearance. | A debt restructuring firm, often alongside an attorney | A business that can carry smaller payments | One funder holds out and sues; renewal offers restart the stack
 
Settlements paid from a sale, equity or long-term debt | Each funder accepts a lump sum or a short payment plan to close its position. | A restructuring firm or attorney, with a CPA | Cash: a division or equipment sale, an investor, a refinance | Tax on forgiven debt; guarantees left open if the release is drafted badly
 
Court-supervised reorganization | A bankruptcy filing stops collection while the business proposes a plan to pay creditors over time. | A bankruptcy attorney | Eligibility, a workable plan, and the budget for the case | Cost and court oversight; personal guarantees are not covered automatically
 
Orderly wind-down | The business closes on a plan that pays priority debts first and settles what it can. | An attorney and a CPA | A decision that the business cannot be saved | Guarantors can still be pursued for what is left

Most owners at this size end up combining paths: a restructuring with most funders and a settlement with one, or a reorganization after a holdout sues. Results vary with the contracts, the funders and the numbers. For a worked example at about $1 million owed, see how to get out of $1 million in merchant cash advance debt; for the court route, see Subchapter V bankruptcy and merchant cash advance debt.

## How do you tell which path fits?

Three checks decide it. Do them in this order, before you call a funder.

- The cash-flow test. Take the business's monthly profit before any advance payments and compare it with the monthly debits. If profit covers a meaningfully reduced payment, restructuring is on the table. If it covers nothing, the question becomes where the cash for settlements comes from, or whether a court-supervised plan or a wind-down is the honest answer. The stack calculator runs this test with your own numbers.
 
- The contract review. For each advance: is there a reconciliation clause, and has it been invoked in writing? Is the personal guarantee a guarantee of performance or of payment? Is there a confession of judgment, and where could it be filed? Which state's law and which court does the contract name? See reading your MCA contract.
 
- The order of risk. Rank the funders by how close each is to suing, whether it holds a confession of judgment, whether its lien is first, and how large its debit is. The plan starts with the funder most able to hurt the business this month.

## What can funders do when a large stack defaults?

The contract usually lets a funder declare a default when a debit is blocked or the account changes, then demand the whole remaining balance. From there the usual steps are notices under its UCC filing to your bank, card processor or customers, and a lawsuit against the business and the guarantor. If the bank has already locked the account, see what to do when a business bank account is frozen; if you are deciding whether to block a debit, read how to stop MCA ACH withdrawals the right way first. If you signed a confession of judgment, where it can be used matters: since August 30, 2019, New York lets one be filed only in the county where the defendant lived or, for a business, had a place of business (N.Y. CPLR 3218), and Florida treats any power of attorney to confess judgment signed before a lawsuit as void (Fla. Stat. 55.05). Each of those steps has a clock, which is why the first move after a default notice should be a plan, not silence. See what to do when you get a default notice and the first 30 days after a lawsuit.

## Could your advance be treated as a loan?

It matters, because usury law applies to loans, not to true purchases of receivables, and a credible loan argument changes what a funder will accept. In the 59 court decisions we reviewed, the reconciliation clause lined up with the outcome every time: where a court found a real, mandatory reconciliation right, the funder won 16 of 16 times, and where the clause was discretionary or illusory, the ruling went toward a loan 21 of 21 times. Bankruptcy courts in 2025 and 2026 leaned toward treating advances as loans, while New York's Appellate Division leaned toward enforcing them as sales. Whether the argument fits your contracts is a question for your own attorney.

## What happens to your personal guarantee?

Almost every merchant cash advance comes with a personal guarantee from the owner. A restructuring or settlement only protects you if the written agreement releases the guarantee as well as the business. A bankruptcy case filed by the business does not, by itself, stop a funder from pursuing the owner as guarantor. Plan for the guarantee from the first conversation, with your own attorney. See personal guarantees.

## Can an SBA loan or a consolidation loan replace the stack?

Usually not while the advances are still running. Since June 1, 2025, SBA rules have not allowed a 7(a) loan to refinance an active merchant cash advance. Under SOP 50 10 8.1, for loans issued an SBA loan number on or after October 1, 2026, an advance can be refinanced only after it has been converted to a term loan that has amortized for at least 24 months with no new advances since, and factoring agreements cannot be refinanced. Refinanced debt must also have been current for the last 12 months, the new payment must be at least 10 percent lower, and SBA proceeds cannot pay a creditor in a position to take a loss. See getting an SBA loan after MCA debt.

Be careful with "reverse consolidation" offers that pay your existing debits in exchange for a new, larger advance. They can lower this week's payment while raising what you owe. See reverse consolidation.

## Will settling create a tax bill?

It can. Forgiven debt is generally taxable income (26 U.S.C. 61(a)(11)), and a lender may file Form 1099-C for a canceled debt of $600 or more. Debt forgiven in a bankruptcy case, or while the business is insolvent (liabilities above the fair market value of its assets, up to the amount of the insolvency), is excluded under 26 U.S.C. 108, though the excluded amount reduces tax attributes such as loss carryforwards. For a partnership or multi-member LLC the tests apply to each partner; for an S corporation, at the corporate level. Whether a settled advance creates canceled-debt income at all can depend on how the advance is characterized, so have your CPA run the numbers before you sign.

## Do you need a lawyer, a restructuring firm, or both?

You need a lawyer if you have been sued, if a judgment or confession of judgment has been entered, if an account has been frozen by court order, if you want to bring a usury or recharacterization claim, or if bankruptcy is on the table. A restructuring firm negotiates payment changes and settlements before it comes to that. At $500,000 and up, many owners need both, working from the same plan; see MCA lawyer or debt relief company for what each one does and how each is paid. One rule worth knowing: the federal Telemarketing Sales Rule bars debt relief companies from collecting fees before they deliver results, but calls to businesses are exempt from the rule except its ban on misrepresentations (16 CFR 310.6(b)(7)). Read exactly when any fee is earned before you sign. See our checklist on how to find a debt relief agency. Once each funder is paid or settled, make sure its lien comes off the public record: how to get a UCC lien removed after you pay it off.

## What to have ready before your first conversation

- Every advance agreement, with the funder's name, the purchased amount, the debit amount and frequency, and the date funded
 
- The balance each funder says you owe, and what you have paid each one so far
 
- The last six months of business bank statements
 
- Any default notice, demand letter, UCC notice, lawsuit or judgment, with the date you received it
 
- A profit and loss statement for the last twelve months, even a rough one
 
- Your payroll and sales-tax deposit status, because those come first in any plan

Then call Hamilton & Merchant at (407) 993-1416 for a free, confidential first conversation about your stack. No pitch and no obligation.

## The research behind this guide

- What a $500,000 merchant cash advance stack costs
 
- State merchant cash advance laws
 
- How courts decide whether a merchant cash advance is a loan
 
- Government actions against merchant cash advance companies
 
- All research

## Questions and answers

### What are the options if my business owes more than $500,000 in merchant cash advances?
Four: a coordinated restructuring with every funder; settlements paid for with a sale, new equity or long-term debt; a court-supervised reorganization such as Subchapter V, handled by a bankruptcy attorney; or an orderly wind-down. Which one fits depends on whether the business earns enough before the debits to carry a smaller payment. Results vary.

### How much do $500,000 in merchant cash advances cost each week?
In Hamilton & Merchant's stack model, $500,000 owed across five advances is debited about $22,600 a week, and $1,000,000 about $45,200 a week. Your own number depends on each contract's payment and term; the stack calculator adds up your positions.

### Can Subchapter V bankruptcy help with more than $500,000 in merchant cash advances?
It can, within a limit. Subchapter V is open to businesses whose qualifying debts are no more than $3,424,000 (cases filed on or after April 1, 2025), and filing stops collection under the automatic stay. A bill to raise the limit to $7.5 million passed Congress in September 2026 but was not law as of October 9, 2026. It is a decision to make with a bankruptcy attorney.

### Can an SBA loan pay off my merchant cash advances?
Not while they are active. Since June 1, 2025, SBA rules have barred refinancing active merchant cash advances. Under SOP 50 10 8.1, from October 1, 2026, an advance qualifies only after it has been converted to a term loan with at least 24 months of amortization and no new advances since.

# Merchant Cash Advance Relief

URL: https://hamiltonmerchant.com/get-help/merchant-cash-advance-relief/

Merchant cash advance work is the most time-sensitive part of what Hamilton & Merchant does. Daily and weekly MCA withdrawals are designed to drain a business faster than any conventional credit instrument, and once two or three advances are stacked on top of each other, the bleed-out clock is measured in weeks, not quarters. We intervene directly with the funder — restructure, settle, or unwind — and, just as critically, we fix the operating patterns that let the stack pile up in the first place.

This page is for owners who are losing sleep over what is being pulled out of the operating account every morning at 6:01 a.m. before they have even opened the doors. We see this every week. The fix is real. The fix needs to start now.

 The MCA stack, in numbers
 
## The hardest acceleration on any small-business balance sheet

 A first advance feels survivable. A second is taken to make the first one survivable. A third closes any remaining margin in the operating account. By the fourth, the business is technically operating to feed the funders rather than the owner.

- 60–180%Effective annualized cost on a typical "1.40 factor / 12-month" MCA contract
 
- ~70%Of MCA-defaulted small businesses we see arrive carrying two or more stacked advances
 
- 2–8 wkTypical window between the first missed weekly debit and a funder UCC sweep on receivables
 
- $0Upfront fee. We do not take fees on the back of a stressed operating account.

## What an MCA actually is — and why it behaves nothing like a loan

An MCA is not a loan in any meaningful legal sense. The funder buys a portion of your future receivables at a discount, and the daily or weekly debit is the mechanism by which they collect on the receivables they bought. That structural distinction — sale of receivables versus extension of credit — is why MCAs are not regulated as loans, why they can carry effective annualized costs that would be illegal under any state usury law, and why the default remedies look nothing like what an owner is used to seeing from a bank.

The practical version: an MCA is faster than a bank, lighter on documentation, almost certain to approve, and structurally engineered to be impossible to refinance into something cheaper while it is current. That is not an accident. The model depends on it.

## The stack mechanic — how owners get from one advance to four

Almost no one takes a first MCA intending to take a second. The first is taken to bridge a real, specific, time-bounded cash gap — a tax bill, a payroll cycle, an equipment failure, a slow quarter that the owner is sure will recover. It often does not recover quickly enough. The first advance's daily debit narrows the operating account by another five to twelve percent of revenue, which makes the next bridge harder to walk, which makes the next phone call easier to take, which is how the second advance enters. The pattern repeats. By the fourth, the daily debits collectively exceed the gross margin of the underlying business, and the owner is operating a working economy for the funders' benefit.

### The debit attaches to the revenue stream

 An MCA debit is not a flat amount you can plan around — many contracts attach a holdback percentage directly to the daily card receipts. A good day funds the funder twice. A bad day still funds the funder, but pulls from the operating reserve to do it. That asymmetry is what makes the stack mathematics so cruel and so quick.

 Photo: Paul Sableman · CC BY 2.0 · Wikimedia Commons

## How direct funder intervention actually works

When we engage on an MCA case, we open contact with each funder by name, on the underwriter or workout desk directly — not the general collections queue. Every major MCA funder has a workout team, and every workout team has authority to restructure that almost no front-line collector has. Knowing the names, the desks, and the realistic ranges of authority is a substantial part of what we are paid for.

 Funder posture, by reading of the file
 
## Not every funder responds the same way

 MCA funders sit on a spectrum from extremely settlement-receptive to extremely litigation-prone. The first job in an MCA engagement is reading where each funder on the stack sits — because the same opening line that gets a 40% settlement at funder A will get a UCC sweep filed by funder B within seventy-two hours.

- 
 Settlement-receptive funders
 
 30–50% off

- 
 Restructure-first funders
 
 Term re-spread

- 
 Aggressive workout funders
 
 15–30% off

- 
 Litigation-prone funders
 
 Counsel needed

 Ranges reflect 2024–2026 cases where the engagement opened before the first missed debit. Outcomes get materially worse once a confession of judgment is on file.

## What we will and will not do in an MCA engagement

### What we will not do

- Recommend "MCA consolidation" loans that just stack a bigger advance on top of the existing ones.
 
- Charge a 15% upfront fee against a stressed operating account before any funder has been contacted.
 
- Tell you to stop the debits unilaterally. That triggers a UCC sweep and makes the case ten times harder.
 
- Move the bank account around to dodge debits. That breaks the contract and exposes you personally.
 
- Promise a settlement number on the first call. We do not know it yet, and neither does anyone else.

### What we will do

- Open direct contact with each funder's workout desk in the first week.
 
- Negotiate term re-spread, holdback reduction, principal settlement, or unwind — whichever fits the file.
 
- Coordinate counsel through our partner network if any funder gets aggressive.
 
- Look at the operating picture that let the stack accumulate. The fix is not done if that conversation does not happen.
 
- Tell you in writing what we expect to get and what we do not, before you sign anything.

## The MCA timeline — what each week looks like

- 
 Week 1 · File assembly + funder-by-funder posture read
 Every contract, every debit history, every confession of judgment, every UCC filing. Read the room before opening a single conversation.

- 
 Week 2 · First-round outreach, workout desks only
 Workout-desk contact at every funder by name. Not the general collections line. The first conversation is positioning, not asking.

- 
 Week 3–4 · Hardship file + first proposal
 Documented hardship narrative goes out with a concrete proposal per funder — restructure, settlement, or unwind depending on posture. Real numbers only; embellishment costs leverage.

- 
 Week 4–8 · Counter rounds
 Most MCA cases settle in two or three rounds inside this window. We hold the line on the bottom number the funder will actually accept, not the first number they offer.

- 
 Week 8–12 · Closeout + operating debrief
 Signed agreements in writing on every funder in scope. Schedule of remaining payments by source of funds. Then the operating conversation that has to happen for the fix to hold.

 An MCA is not a financing problem. It is a margin problem that someone offered you a financing-shaped band-aid for. Until the margin problem is named, no settlement holds.
 — Tammy Houston

## What an MCA settlement actually looks like

A typical settled MCA goes from a daily debit of $850 against a remaining balance of $84,000 to a single lump payment of $32,000–$45,000, paid from cash we have helped the owner find (often a combination of receivable acceleration, vendor stretch, and a coordinated tax-refund or insurance-rebate recapture). The daily debit stops. The funder releases the UCC. The owner exhales for the first time in eight months. That is the win we are paid for, and that is the kind of outcome we run every week.

The harder cases — multi-stack, post-default, with a confession of judgment already filed in New York — require coordination with counsel and a more deliberate workout, but the architecture of the relief is the same. Daily debits stop. UCC releases. Owner exhales.

### The holdback is not separate from the business

 Every card swipe lives twice: once as revenue, once as a holdback transfer. The owner sees the revenue on the close-of-day report. The funder gets paid the next morning. That two-day visibility lag is part of why the stack creeps up faster than owners can see in real time. Real-time cash visibility is the operating fix that pairs with the settlement fix.

 Photo: Nicbou · CC0 · Wikimedia Commons

## What you walk away with

- Daily and weekly debits stopped, restructured, or settled across every funder in scope, in writing.
 
- UCC releases filed on every funder we settle with.
 
- A real-time cash visibility setup so the next month is not blind.
 
- An operating debrief on what produced the stack, written in plain English you can refer back to.
 
- Coordinated counsel from our partner network if any funder goes litigation route.
 
- Ninety days of follow-up access at no charge after closeout.

## Common questions

### I am still current on my MCAs but the daily debits are killing me. Am I too early to call?

 You are exactly on time. The strongest negotiating outcomes happen before the first missed debit, because the funder still wants to keep the relationship. Coming in pre-default lets us run restructure conversations rather than workout conversations, and those have materially better terms.

### What if I have already missed debits and the funder has filed a UCC?

 Not too late, but the case file gets harder. Settlement is still very possible, but it usually requires lump-sum cash rather than restructure. If the funder has obtained a confession of judgment, we pull in counsel from the partner network immediately — that is the line where in-house work has to share the desk with licensed defense.

### Can I just stop the debits and force them to negotiate?

 No. Do not do that. Stopping the debits unilaterally triggers a UCC sweep on your receivables, often within seventy-two hours, and can trigger personal liability under the confession of judgment if there is one on file. The way to slow the debits is to negotiate them down, not to halt them and hope.

### Will an MCA settlement hurt my credit?

 MCAs typically do not report to consumer credit bureaus the way bank loans do, because they are not loans. They do report to commercial bureaus, and a settlement will reflect on a Paynet or D&B file. We walk through the specific reporting trajectory for each funder before you commit to any path.

### How much will this cost?

 No upfront fee. The fee is a portion of documented savings (settlement spread, holdback reduction, fee waivers) paid as the savings are realized, never before. We disclose the exact fee structure in writing before any work begins.

### If you are reading this on a Sunday night, do not wait until Monday morning.

 Text us at (407) 993-1416 tonight. Real humans, no phone tree. The earliest week of an MCA engagement is the one that determines almost everything that follows.

# Questions and answers

URL: https://hamiltonmerchant.com/faq/

## Are you a law firm?

No. Hamilton & Merchant is a business debt relief and consulting firm. When a case requires legal work, such as a bankruptcy filing, litigation, or a specific legal claim, we coordinate with licensed attorneys in our partner network and stay engaged with you through the process. We say this up front because a lot of firms in this space blur the line.

## Is the consultation really free?

Yes. The first call is free and there are no upfront fees. If we engage, the scope and price are provided in writing before any paid work begins.

## Do you negotiate directly, or hand me off?

We negotiate directly. We make the calls, write the counter-offers, and close the agreements. Partners are brought in only for work that requires a license we do not hold, and we stay involved when they are.

## Will you push me toward bankruptcy?

No. Bankruptcy is sometimes the right step and often it is not. Negotiation, workout, restructure, and turnaround paths usually come first. We tell you where your situation falls and why, and if a bankruptcy attorney is the right call we introduce one.

## Where are you located, and do you work outside Florida?

The firm is Florida-based, with its office at 425 West Colonial Drive in Orlando, and it works with businesses across the United States. Most of the work happens by phone, text, video, and email, so location is rarely a barrier.

## How long has Hamilton & Merchant been in business?

The firm was established in 2014 as a loan brokerage and moved to business debt relief in 2020, after watching too many of its own clients get crushed by predatory financing during the pandemic. Business debt relief has been the firm's only work since.

## What if I have already signed with another firm?

Call anyway. We will give you a plain read on the agreement you signed. If it is serving you well, stay with it. If it is not, we can help you think through what to do next.

## What if the real issue is operational, not just the debt?

That is common, and it is part of the conversation we expect to have. Consulting on the operating side is half of what we do. Working on it alongside the debt is usually what makes the recovery last.

## What is a merchant cash advance?

A merchant cash advance, or MCA, is a purchase of a portion of a business's future receivables at a discount. The funder wires an advance today and collects a fixed payback amount through daily or weekly debits from the business bank account. Because it is structured as a sale of receivables rather than a loan, it is priced with a factor rate instead of an interest rate and is not regulated like a loan in most states.

## What does a factor rate mean in dollars?

Multiply the advance by the factor rate to get the payback amount. A $50,000 advance at a 1.35 factor means $67,500 has to be repaid, so the cost of the money is $17,500. Divide the payback by the number of business days in the term to get the daily debit. On a nine-month term that is about $357 per business day. Our MCA cost calculator does the arithmetic for your own numbers, including the annualized rate.

## Can a merchant cash advance be settled for less than the payback amount?

Often, yes. Funders have workout desks with authority to restructure or accept a reduced lump sum, particularly once a file is in default and the alternative is litigation with an uncertain outcome. How much movement there is depends on the funder, the contract, whether a personal guarantee or confession of judgment was signed, and how early we get involved. We open contact with each funder by name and negotiate the whole stack, not one advance at a time.

## What happens if I stop paying an MCA?

The contract usually treats a stopped debit as a default, which can trigger the full payback amount, default fees, a UCC lien on the business's assets, notices to your card processor or customers, and a lawsuit against the business and any personal guarantor. None of that happens in a single day, but the window is short. If a debit is going to bounce, that is the moment to call us, before the default clock starts.

## What is a confession of judgment, and does it apply in Florida?

A confession of judgment is a clause in which the borrower agrees in advance that the funder can enter a court judgment without a trial if the account defaults. Florida Statute 55.05 makes powers of attorney to confess judgment absolutely null and void, so one cannot be entered in a Florida court. Since August 2019, New York's CPLR 3218 also bars filing them in New York against debtors who do not live or do business there. A judgment validly entered in another state can still be domesticated, so read the clause with us before assuming it has no teeth.

## What is the reconciliation clause in my MCA contract?

A reconciliation or true-up clause lets the merchant ask the funder to adjust the daily debit so it matches the agreed percentage of actual receipts when revenue drops. Courts treat the presence and quality of that clause as one of the main signs that an agreement is a real purchase of receivables rather than a disguised loan. Many merchants never use it. If your revenue has fallen, invoking it in writing is often the first move.

## What is MCA stacking?

Stacking is taking a second, third, or fourth advance while earlier ones are still being repaid, usually to cover the cash the earlier debits are removing. Each new advance adds another daily debit on top of the last. Most MCA contracts prohibit it, and by the third or fourth advance the combined debits often exceed the gross margin of the business.

## What is a UCC lien and why did my bank freeze my account?

A UCC-1 financing statement is a public filing that gives a funder a claimed security interest in the business's assets, including receivables and bank deposits. After a default, funders send notices to banks and processors demanding that receivables be paid to them instead, which is what a frozen account or a diverted card batch usually is. Some of these notices overreach, and the response depends on what was actually signed.

## What should I have ready for the first call?

Rough numbers are enough: monthly revenue, what each funder or lender pulls and how often, rent, payroll, and anything with a deadline on it such as a notice, a lawsuit, or a bounced debit. If you want a head start, the free diagnostic takes ten minutes and does not ask for an email.

## How fast can I get relief?

It varies. Stopping the bleeding, such as pausing or reducing daily debits and getting a frozen account released, can move in days. Negotiated settlements and lease restructures usually take weeks. The operating-side work that keeps the relief durable is often a quarter or two of steady effort. We give you a realistic timeline for both at the start.

## How are you paid?

There are no upfront fees and the first conversation is free. If you engage us, the scope, the fee, and the timeline go in writing before any paid work begins, and there are no surprises after that.

## Will this hurt my credit?

Some paths affect business or personal credit and some do not. A negotiated settlement that is paid as agreed is usually far better for credit than a default and a judgment. We tell you which category each option falls into for your specific situation and whether the trade is worth it for where the business actually is.

## Do you handle tax debt?

Payroll-tax and sales-tax debt are treated as the first priority in any plan we build, because they follow owners personally. Negotiating with the IRS or the Florida Department of Revenue is licensed work, so we bring in a tax professional from our partner network for that part and stay in the room. Our guide to private versus tax debt explains the difference.

## Can you help with a commercial lease?

Yes. Rent is often the largest fixed cost in a distressed business, and most landlords would rather renegotiate than replace a tenant. We negotiate reductions, deferrals, restructures, and, when it fits, clean exits. Almost every lease has a personal guarantee, so the timing of that conversation matters.

## Do you work with businesses outside the industries you list?

Yes. The fourteen industries on the site are the ones we see most often, but the playbook transfers. If your business owes money and cannot see a clear path, call. If we are not the right fit we will say so and point you somewhere that is.

## Is the conversation confidential?

Yes. What you tell us stays with us. We do not share your information with funders, lenders, or anyone else without your direction, and we never sell it. Our privacy policy sets out the details.