Testimonials
One of the issues with merchant cash advances or the operators who operate those companies in an atypical loan agency is that they have a high tendency of default. Among these Merchants go into default, then the MCA or merchant cash advance companies typically rush to recover those funds. Sometimes they wait a while to cover those funds, and other times they rush very quickly to recover the funds. and when they rush to recover the funds, they use the court system quite aggressively, including filing cases in obscure jurisdictions in Upstate New York without a real basis for venue. When this happens, there is also another thing that transpires, and that is that the notice of the lawsuit is typically delivered by mail. This is because the agreements provide comments when we talk about agreements for talking about the merchant cash advance agreements.
The reputation of the merchant cash advance industry, as opposed to a typical loan agency, does not have a terribly enlightening or good reputation because a lot of times Merchants have trouble paying their bills, and when they have trouble paying their bills, they go into default, and when they go into default, the merchant cash advance companies typically file a lawsuit against the merchant. the only lawsuit against the merchant, the merchant doesn’t know about it, even though the agreement may provide for service by mail, and the merchant cash advance company or the merchant cash advance company’s attorney serves it by mail, and then files an affidavit of service of stating, with the core, as a practical matter this is not typically very effective because in a lot of cases the merchants do not receive notice of lawsuit, and a judgment gets entered on default.
When a judgment gets entered on default, it’s very difficult or very costly at least to undo that judgment. When this happens, this could result in even additional fees, when those fees could be used instead to repay the merchant cash advance. However because of the conduct of the merchant cash advance company, or companies, but not a loan agency, it’s often an issue that the merchants do not like, and the merchant there for the last person that they want to pay for the last company that the merchant wants to pay at the merchant cash advance company that now has frozen the company’s cash. A lot of times these companies do want to actually pay back the immersion cash advance operator, but they cannot, because their funds are restricted, and not only can I not repay the merchant cash advance company, but they also have trouble paying their bills, and operating their businesses. This really puts the merchants in a cash catch 22 and when that happens they are really at a loss and nobody wins here. Nobody wins here because in the first instance the merchant cash advance company doesn’t get repaid, the company or the merchant itself cannot conduct its business, and the merchant’s clients cannot get serviced by the merchant. This is a trifecta of losses, and it’s the opposite of win-win in fact it’s a lost loss loss, again, it’s the merchant, the merchant cash advance company, and the client of the merchant that is now in default.
Even if the merchant cash advance company drives the merchant into default, and gets the default judgment against the merchant, all hope is not over. There have been situations where the merchant hires a qualified attorney to attempt to vacate the default judgment, whether or not a loan agency is involved. This has been done successfully numerous times, and there are strip standards that the court examines when deciding to vacate the judgment or at least they perform a very strict analysis when determining whether or not to vacate a default judgment. the MCA Sheriff’s Law Firm, The Lawyer James (in New York), has been successful in vacating judgments in the past. Not only have they vacated the judgments or adjustment before, but they have also gotten the case dismissed on unrelated grounds. But it’s important to not let your merchant cash advance financing arrangement go into default, because it at the end of the day costs you more money because you have to be an attorney to vacate your default, and in some instances, that cash is already restricted. and another issue that you need to do even before a default judgment is entered is potentially deal with restricted funds that are restricted outside the context of lawsuit. and a merchant cash advance company is certainly permitted to do that because the agreements allow them to do that and file a UCC against your cash and receivables; a loan agency would do this too, most likely. They often also lock up your accounts like PayPal and cash app and send notices to people who owe you money and people that do business with you. It is very important to stay on top of your merchant cash advance financing arrangements because if they get out of control then you could potentially get yourself in a situation where you don’t want to be, and have your cash locked up and restricted.
Another important provision in these agreements to note particularly in the merchant cash advance agreements, is what’s called a reconciliation provision. This provision is very important and critical because it could potentially stave off any locking up of funds or restricting funds or have you gone to default. What reconciliation provision does essentially is enables you to lower your payments to the extent that the receivables are lower than what they were when you first got the financing; a loan agency presumably looks at receivables too as well. So instead of doing something sketchy or untoward like changing bank accounts or canceling ACHs or doing and making some drastic moves, when your cash is somewhat constricted or your revenues are lower than they expected or lower than what they were when you first got the financing, take a look at the agreement follow the steps in the reconciliation provision, and then the financing company will be obligated to lower your payments and it can avoid a lot of headache down the road including lawsuits, judgments, restrict the bank accounts, and your customer sending money to the merchant cash advance company rather than send it to you.