Home seo assets Disputes over merchant cash advances are on the rise

Disputes over merchant cash advances are on the rise

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Following the tradition, the merchant cash advance (MCA) industry originated in New York City, and its law continues to be the law of choice in many MCA agreements. This has given rise to numerous disputes because, unlike dozens of other statesNew York has a 25% criminal usury limit on business loans. In many disputes, MCA lenders argue that MCA agreements are not loans and are therefore exempt; while professional clients (called “traders”) seeking to evade their obligations argue, unsurprisingly, that these are in fact capped loans.

There are now dozens of decisions at first instance and several on appeal on this issue. This well-developed MCA case law has resulted in more careful drafting of MCA agreements in recent years, but some recent decisions suggest that MCA litigation is about to get wilder.



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