Struggling with business debt?

Are you a small business owner in Atlanta struggling with a merchant cash advance (MCA)? You’re not alone. We’ve seen countless entrepreneurs fall victim to these seemingly attractive but often predatory financing options. At DelanceyStreet, we’re here to help you understand your rights and fight back against unfair MCA practices.

What is a Merchant Cash Advance?

A merchant cash advance is a type of alternative financing where a company provides an upfront lump sum of cash to a business in exchange for a portion of future credit card sales. While MCAs can provide quick access to capital, they often come with exorbitant fees and aggressive collection tactics.Here’s a quick breakdown of how MCAs typically work:

While MCAs aren’t technically loans, they function similarly in practice. The lack of regulation in Georgia means MCA companies can often skirt usury laws and charge effective interest rates well over 100% APR.

The MCA Trap: Why Atlanta Businesses Need Defense

Many Atlanta business owners turn to MCAs as a last resort when traditional bank loans aren’t an option. However, the predatory nature of many MCA agreements can quickly lead to a devastating cycle of debt. Here’s why:

1. Confusing terms: MCA contracts are often filled with complex legal jargon designed to obscure the true cost.
2. Daily/weekly payments: Frequent auto-debits from your account can cripple cash flow.
3. Stacking: Some businesses take on multiple MCAs, compounding their debt.
4. Personal guarantees: Your personal assets may be at risk if the business can’t repay.
5. Aggressive collections: MCA companies often use intimidating tactics to collect.

We’ve seen cases where Atlanta businesses were forced to close their doors due to unsustainable MCA debt. Don’t let this happen to you!

Legal Defenses Against Predatory MCAs in Georgia

While Georgia lacks specific MCA regulations, there are still legal avenues to protect your business. Here are some potential defenses we can explore:

1. Usury Laws

Although MCAs claim to be “purchases” of future receivables rather than loans, courts have sometimes ruled otherwise. In Merchants Advance LLC v. Freel, 2019 Ga. App. LEXIS 238, the Georgia Court of Appeals found that an MCA agreement was actually a loan subject to usury laws.We can argue that your MCA violates Georgia’s usury statute, O.C.G.A. § 7-4-18, which caps interest rates at 60% for loans under $3,000 or 16% for larger amounts.

2. Unconscionability

MCA agreements may be deemed unconscionable if they’re grossly unfair. In NuVision Financial Services, LLC v. GLAS USA LLC, 2020 U.S. Dist. LEXIS 148887, a federal court in Georgia found an MCA agreement unconscionable due to its one-sided terms and excessive fees.We can argue that your MCA agreement is unconscionable under Georgia contract law (O.C.G.A. § 11-2-302) if it contains unfair terms or imposes an undue hardship.

3. Fraud or Misrepresentation

If the MCA company misled you about the terms or costs of the agreement, we may have grounds for a fraud claim. Georgia law (O.C.G.A. § 51-6-2) allows for recovery of damages caused by fraudulent misrepresentation.

4. Violation of UCC Article 9

Some courts have found that MCAs are actually disguised security interests subject to Article 9 of the Uniform Commercial Code. In Colonial Funding Network, Inc. v. Epazz, Inc., 252 F. Supp. 3d 274 (S.D.N.Y. 2017), the court held that an MCA was a disguised loan subject to UCC filing requirements.If your MCA company didn’t properly perfect their security interest under Georgia’s UCC (O.C.G.A. § 11-9-101 et seq.), we may be able to challenge their claim on your assets.

How We Can Help: Our MCA Defense Strategy

At DelanceyStreet, we take a comprehensive approach to defending Atlanta businesses against predatory MCAs. Here’s how we can assist you:

1. Contract review: We’ll carefully analyze your MCA agreement to identify potential legal vulnerabilities.
2. Negotiation: We’ll attempt to renegotiate terms with the MCA company to make repayment more manageable.
3. Litigation defense: If you’re facing a lawsuit, we’ll vigorously defend your interests in court.
4. Counterclaims: Where appropriate, we’ll file counterclaims against the MCA company for unfair practices.
5. Debt restructuring: We can help explore options to consolidate or restructure your MCA debt.

Remember, time is of the essence when dealing with MCA issues. The sooner you seek legal help, the more options we’ll have to protect your business.

Case Study: How We Saved an Atlanta Restaurant

Let’s look at a real-world example of how we’ve helped Atlanta businesses fight back against predatory MCAs:

Sarah’s Café (name changed for privacy) was a popular midtown Atlanta restaurant struggling with cash flow during the pandemic. The owner, Sarah, took out an MCA for $100,000 with daily repayments of $1,500. Within months, Sarah found herself unable to keep up with the payments and facing aggressive collection tactics.

We stepped in to help Sarah by:

1. Analyzing her MCA agreement and identifying multiple legal issues
2. Negotiating with the MCA company to temporarily pause repayments
3. Filing a counterclaim alleging usury and unconscionability
4. Ultimately settling the case for a 40% reduction in the amount owed

Thanks to our intervention, Sarah’s Café was able to stay open and eventually return to profitability.

Don’t Face MCAs Alone: Contact DelanceyStreet Today

If you’re an Atlanta business owner struggling with a merchant cash advance, don’t wait to seek help. The experienced attorneys at DelanceyStreet are here to protect your rights and fight for your business’s future.We offer free consultations to assess your situation and discuss your legal options. Remember, the MCA companies have teams of lawyers on their side – shouldn’t you have expert representation too?Contact us today to schedule your free consultation. Let’s work together to defend your Atlanta business against predatory lending practices and secure a brighter financial future.