When a funder takes your money, your account or your business to court
Merchant cash advance defense services
Usher Law Group defends businesses and their owners against merchant cash advance funders across the country. Whether a funder has sued, frozen your account or filed a lien, the right first step depends on what has already happened.
- MCA Lawsuit Defense: answering the complaint and raising the defenses that matter
- Confessions of Judgment: vacating judgments entered without a lawsuit
- Frozen Bank Accounts: restraining notices, levies and emergency relief
- Personal Guaranty Defense: protecting owners who signed personally
- UCC Lien Removal: clearing filings that block loans and sales
- MCA Settlement & Restructuring: negotiating payoffs and payment plans with one or more funders
How merchant cash advance disputes start
A merchant cash advance is usually sold as a purchase of a business's future receivables, not as a loan. The funder pays a lump sum and takes a fixed daily or weekly debit from the business account until a larger amount is repaid. When sales slow down, those debits can take most of the cash coming in. Many owners then take a second or third advance to cover the first, and the payments stack up.
The dispute usually begins when a payment bounces or the business asks the funder to stop or reduce the debits. Funders often respond quickly: they declare a default, add fees, send notices to customers or card processors under a UCC filing, sue the business and the owner who signed a personal guaranty, or try to enforce a confession of judgment.
What we do
- Review the agreement. Whether a merchant cash advance is treated as a true sale or as a loan depends on its terms and how the funder acted, for example whether the agreement allows payments to be adjusted to actual sales and whether the funder honored reconciliation requests. That question can affect usury and other defenses.
- Map every funder. We list each advance, the balance claimed, the payments already made, UCC filings and any pending court action, so decisions are made on the whole picture.
- Respond to court action. We answer lawsuits and move to vacate or limit confessions of judgment where the grounds exist. See MCA lawsuit defense and confessions of judgment.
- Address account freezes and liens. See frozen bank accounts and UCC lien removal.
- Protect the owner. See personal guaranty defense.
- Negotiate. Where it makes sense, we negotiate payoffs or payment plans with one or several funders. See MCA settlement and restructuring.
No result is guaranteed. Outcomes depend on the contract terms, the funder, the court and what has already happened in the case.
What to bring
- Every merchant cash advance agreement, including addenda, the personal guaranty and any confession of judgment
- Bank statements showing the debits for each funder
- Any reconciliation or payment-adjustment requests you sent, and the replies
- Default notices, emails, texts and records of calls from funders or their collectors
- Any summons, complaint, judgment, restraining notice or levy, and the date you received it
- UCC lien notices or letters sent to your customers or processor
- A list of all current advances and loans with approximate balances
If the situation is urgent
- Do not ignore court papers or bank notices, even if you believe the claim is unfair.
- Do not sign a new advance, a settlement or a new confession of judgment without legal review.
- Talk to a lawyer before moving money between accounts or closing an account. Some steps taken to avoid a funder can create new legal problems.
- Keep a written record of every contact with the funder and its collectors.
Usher Law Group is based in Brooklyn and handles merchant cash advance matters for businesses in many states. To have your agreements reviewed, contact us.
Frequently asked questions
Is a merchant cash advance a loan?
Funders describe it as a purchase of future receivables, not a loan. Courts look at the actual terms and conduct, such as whether payments could be adjusted to real sales and whether the funder could collect no matter how the business performed. If an advance is treated as a loan, usury and other lending laws may come into play.
Can a funder sue me personally?
Often yes, if you signed a personal guaranty. Many guaranties cover the business's performance under the agreement. Whether the guaranty can be enforced, and for how much, depends on its wording and the facts. See our personal guaranty defense page.
Does the Fair Debt Collection Practices Act protect my business?
Generally no. The federal FDCPA covers consumer debts incurred for personal, family or household purposes, not business debts. Other defenses and state laws may still apply to a merchant cash advance dispute.
Can you settle with several funders at once?
We can negotiate with each funder involved and try to coordinate the terms so the business can afford the total. Each funder decides whether to accept, and no particular discount can be promised.
My account was frozen. What should I do first?
Collect the bank notice and any court papers, note the date you received them, and contact a lawyer right away. The next step depends on whether the freeze comes from a judgment, a confession of judgment or something else.