California MCA Defense Lawyers Business Debt Relief

California MCA Defense Lawyers Business Debt Relief

Merchant cash advances (MCAs) can provide critical working capital for small businesses. However, predatory lending practices have led many businesses into unsustainable debt spirals. This article provides an overview of MCA lending in California, common abusive tactics, and how business owners can work with specialized attorneys to find debt relief solutions.

The MCA Industry and Its Evolution

Merchant cash advances allow businesses to receive an upfront lump sum in exchange for a percentage of future credit card sales. This alternative financing filled a critical void left by traditional bank loans after the 2008 financial crisis.However, the largely unregulated MCA industry has given rise to predatory tactics that take advantage of small business owners’ lack of financial literacy. Exorbitant interest rates, overly aggressive collections, and obscure contract terms have become commonplace.In recent years, states have started implementing stricter regulations around MCA lending:

  • California SB-1235 (2018) – Required disclosures of APRs and total repayment amounts
  • New York Bill A-8217 (2020) – Capped interest rates and banned confessions of judgement

But more consumer protections are still needed at both state and federal levels.

Common Abusive MCA Tactics

While not all MCA funders engage in unethical behavior, many rely on the following predatory tactics:

Excessively High Interest Rates

  • Rates often exceed 100% APR when accounting for fees
  • Makes it nearly impossible for businesses to pay down principal

Personal Guarantees

  • Requiring business owners to personally guarantee the MCA loans
  • Allows lenders to seize personal assets in case of default

Confessions of Judgement

  • Waiving borrowers’ right to defend themselves in court
  • Lenders can obtain judgements without any notice

Aggressive Collections

  • Harassing business owners with frequent phone calls
  • Freezing bank accounts and credit card processing
  • Contacting customers directly to collect payments

Finding Attorney Assistance

With California’s complex regulations around commercial lending, it is highly advisable for struggling business owners to seek legal assistance. Attorneys well-versed in state laws can help clients understand their rights and navigate appropriate solutions.

Evaluating Violations of California SB-1235

Experienced lawyers can review MCA contracts to spot violations of disclosure requirements and interest rate caps under California SB-1235. Proving violations may result in contracts being declared void or unenforceable.

Negotiating Settlements

In many cases, attorneys can negotiate with MCA lenders to reduce outstanding balances or restructure repayment terms. Their expertise in contract law and debt relief gives them leverage in these discussions.

Defending Against Lawsuits

Should MCA lenders file lawsuits for breach of contract or to collect judgements, defense lawyers can put up strong cases to have suits dismissed or damages reduced. A vigorous legal defense also puts pressure on lenders to settle.

Avoiding Bankruptcy

While bankruptcy may still prove necessary as a last resort, skilled lawyers exhaust all other options first. This avoids long-term damage to the business’s credit and viability.

Finding the Right Legal Help

With California’s stringent regulations around commercial lending, it is critical to work with lawyers well-versed in state laws. Warning signs of predatory law firms include:

  • Guarantees of specific outcomes
  • Requests for upfront payment of fees
  • Lack of transparency around fees and process

Reputable MCA defense lawyers typically offer free initial consultations and have a track record of positive outcomes. They outline multiple options based on the client’s situation instead of a one-size-fits-all approach.When researching firms, business owners should look for:

  • Deep expertise in California commercial lending laws
  • Focus specifically on MCA lending and debt relief
  • Record of favorable settlements and dismissed lawsuits
  • Reasonable fee structures paid from debt relief proceeds

The Delancey Street Approach

Founded in 2022, Delancey Street takes a unique consultative approach to helping business owners regain control of their financial futures. Our dedicated experts have assisted over 500 entrepreneurs with tailored solutions to MCA debt relief.

Complimentary Case Review

We start every engagement with an in-depth review of the client’s situation – their business, contracts, debts, and goals. This sets the foundation for creating a customized resolution plan.

Objective Perspective

With no affiliations to lenders or other law firms, we objectively analyze all options purely in the client’s interests. Our independence ensures unbiased advice.

Flexible Solutions

Based on each client’s needs, we create flexible debt relief solutions. These may involve negotiating settlements, restructuring contracts, defending lawsuits, or even facilitating creditor changes.

Ongoing Support

Even after initial debt elimination, we provide ongoing advisory services to help clients avoid such distress again. This may cover financial planning, access to growth capital, or business process improvements.In contrast to traditional law firms, Delancey Street serves as an all-encompassing partner for business growth beyond immediate debt relief. Contact us today at 212-210-1851 for a free consultation with our legal and financial experts.

Common Defenses Against Abusive MCA Tactics

When MCA agreements have violated California lending laws or contractual good faith, attorneys have several avenues to defend business owners against lenders’ lawsuits and forced collections.


If contract terms are unduly harsh or oppressive, courts may rule them unconscionable and unenforceable. Elements pointing to unconscionability include:

  • Deception or refusal to explain terms
  • Terms severely unfavorable to one party
  • Significant imbalance in parties’ power or sophistication

By proving elements like hidden fees or refusal to explain agreements, attorneys can potentially have entire contracts thrown out.

Breach of Implied Covenant of Good Faith

All contracts carry an implied covenant requiring parties to deal fairly and in good faith. Tactics like unreasonable fee hikes or failure to renegotiate terms during changed circumstances may constitute breaches.

Violations of State/Federal Lending Laws

As outlined earlier, MCA contracts may violate laws around usury limits, fee disclosures, or collection harassment. Proving such violations is grounds for contracts being voided, fees reduced, or civil penalties assessed.

Statute of Limitations Expiration

If lenders sue after California’s 4-year limit for written contracts has expired, attorneys can have cases dismissed outright based on the statute of limitations.

Steps in the MCA Debt Relief Process

  • Initial Consultation – Complimentary call to assess situation and options
  • Document Review – Attorneys analyze contracts to spot potential violations or defenses
  • Resolution Planning – Customized plan created based on business needs and goals
  • Creditor Negotiations – Leveraging defenses and state laws to negotiate settlements
  • Litigation Defense – Aggressive defense against lawsuits to eliminate or reduce judgements
  • Ongoing Advisory – Optional financial and operational advisory services for stability

The optimal debt relief solutions combine both legal leverage and operational adjustments for sustainable business health.

Delancey Street – Your Partner Beyond Debt Relief

At Delancey Street, our mission goes beyond simply resolving MCA debt to set businesses up for long-term success. We start by fully understanding clients’ aspirations to create customized growth blueprints.

Operational & Financial Advisory

Our advisors identify improvements across pricing, cash flow, cost management, and financial planning to optimize stability and profitability. We also facilitate access to responsible financing for expansion needs.

Growth Consulting

Leveraging decades of experience advising small businesses, we consult on refinements across marketing, product development, and customer experience to drive sustainable top-line growth.

Personalized Service

Each client has a dedicated Delancey Street advisor providing tailored ideas and accountability. We become ingrained partners in your journey towards financial freedom.Contact us at 212-210-1851 for a free consultation on how we can collaborate to help you achieve your full business potential. The first step is regaining control of your financial future.

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