North Carolina MCA Defense Lawyers Business Debt Relief

North Carolina MCA Defense Lawyers Business Debt Relief

Small business owners in North Carolina often turn to merchant cash advances (MCAs) to access quick financing. But MCA loans come with high interest rates and aggressive collection tactics that can overwhelm borrowers. If you signed an MCA agreement that you now regret, contact our North Carolina MCA defense lawyers for help responding to lender harassment and settling or disputing the debt.

How MCA Loans Work

Merchant cash advances provide fast access to capital by essentially selling a business’s future credit card sales at a steep discount. Here’s how it works:

  • The MCA company gives the business an upfront lump sum payment in exchange for a percentage of future credit card receivables.
  • There’s no set repayment schedule. Instead, the borrower authorizes the lender to automatically withdraw a fixed percentage of daily credit card sales – typically between 10-20% – until the full amount plus fees and interest have been repaid.
  • MCA contracts often have repayment terms of less than a year and annualized interest rates over 100%.

Why MCA Loans Are Risky

While fast and easy to qualify for, MCA loans pose serious risks for small business owners:

  • High Cost – MCA rates often exceed 100% APR when accounting for fees. This makes them much pricier than small business loans from an SBA lender.
  • Short Repayment Terms – MCA contracts often demand full repayment in under a year, requiring very high daily payments.
  • Aggressive Collections – MCA lenders will raid business bank accounts and freeze credit card processing without warning to collect debts.
  • Personal Guarantees – Owners usually sign MCA agreements in their personal capacity, leaving them personally responsible for repayment.

As a result of these risky terms, many businesses struggle to keep up with MCA payments. Fortunately, there are defenses business owners can assert when facing collections on an MCA loan.

MCA Contract Defenses in North Carolina

If your North Carolina business is facing aggressive MCA collections, don’t panic. Under North Carolina law, courts won’t enforce loan agreements that are criminally usurious or fail to comply with state lending regulations. Potential defenses include:


North Carolina caps interest rates on commercial loans at 16% APR under Article 2 of Chapter 24 of the North Carolina General Statues. Since MCA rates often far exceed this limit, courts may rule these contracts void as criminally usurious loans.However, usury caps don’t apply to purchases of future receivables. So MCA lenders try to frame their advances as such to avoid rate limits. But if the transaction is truly a loan rather than a sale, usury defenses remain viable.


Under § 25-2-302, North Carolina courts can refuse enforcement of grossly unfair contracts that took advantage of one party’s lack of understanding or bargaining power.MCA agreements often contain terms so egregiously one-sided that a court may deem them unconscionable. For instance, provisions allowing the lender to raid the borrower’s bank accounts without notice.

Licensing Violations

In North Carolina, lending businesses must obtain licenses from the State Commissioner of Banks.Many MCA companies fail to get proper North Carolina lending licenses. This oversight gives borrowers grounds to invalidate the agreements for noncompliance with state law.

Responding to MCA Harassment

When facing aggressive MCA collections, act quickly to protect your rights. Here are some practical tips:

  • Record Communications – Keep records of all calls, emails, texts and letters from the MCA lender or debt collectors. These records help document illegal collection practices.
  • Dispute the Debt – Send a formal written dispute challenging the validity of the debt and revoking consent to contact you. This requires the lender to verify the debt and stops further communication.
  • Close Compromised Accounts – If the lender has withdrawn funds without permission, close any compromised bank accounts and credit card merchant accounts. Open new secure accounts to prevent further access.
  • Seek Legal Counsel – Contact qualified business attorneys to review your case and immediately send the lender a representation letter invoking your rights.

Settling MCA Debt Lawsuits

If an MCA lender sues your business to collect, settlement may be the most pragmatic option. In a negotiated settlement, you pay less than the full bogus debt in exchange for the lender releasing all claims and liens against you.Settlement talks often start after your lawyer files an Answer raising defenses and Counterclaims disputing the debt. Settlement terms typically include:

  • Discounted Payoff – You pay a percentage of the outstanding debt balance (often 30-50%).
  • Installment Plan – The payoff amount is divided into affordable monthly payments.
  • Liens & Judgments – All liens and legal claims related to the debt get removed.

Reaching agreement requires extensive back-and-forth negotiation between the lawyers. Once final terms have been hammered out, your North Carolina business attorney will draft a settlement agreement stipulating each party’s responsibilities.

Let Our North Carolina Attorneys Defend Your Business

If you are facing North Carolina MCA collectionscontact our office today for a free case review. Our experienced North Carolina business lawyers can help you respond to lender harassment and analyze defenses to invalidate the agreement. We routinely negotiate reduced payoff settlements on disputed MCA debts as well. Call 212-210-1851 now to discuss your situation in a free consultation.

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