Decoding Merchant Cash Advances in New York: A Legal Overview
February 28, 2024
A Legal Overview of Merchant Cash Advances in New York
New York, a bustling hub of financial activity, presents a unique landscape for
Merchant Cash Advances
(MCAs). Despite being a favored environment for MCAs, the state has pioneered laws that impose consumer-like disclosures for specific commercial loans. This article delves into the legal intricacies surrounding MCAs in New York, shedding light on the Commercial Finance Disclosure Law (CFDL), its implications, and crucial considerations for businesses and MCA providers.
The CFDL in New York, effective since August 1, 2023, extends disclosure requirements, typically associated with consumer lending, to commercial financing instruments, including MCAs. Importantly, these regulations uniformly apply to both MCA brokers and funders.
MCA entities predominantly owned by a financial institution, especially a depository bank, are exempt from the CFDL. This exception underscores the significance of collaborations with FDIC-insured banks for MCA funders.
The final rules define the geographical scope triggering the CFDL's applicability, narrowing it down to where a transaction occurs or the involved parties' location. This limitation helps in clarifying the jurisdiction for compliance.
The CFDL applies to transactions where the recipient is managed or directed from New York or is a resident of New York. Like in other states, relying on the business address provided by the recipient becomes a pivotal determinant.
The law allows MCA funders to assign their rights in the MCA contract. In cases involving a broker, the final rules mandate a clear written disclosure of how and by whom the broker will be compensated.
The CFDL obligates the calculation and disclosure of the finance charge on a transaction, encompassing fees charged by the MCA funder for underwriting and origination.
New York enacted SB 1235 ahead of the curve, requiring particular revelations for business financiers and MCA providers. Notably, the state distinguishes itself by requiring the disclosure of an Annual Percentage Rate (APR), departing from the previously used Annualized Cost of Capital (ACC). This disclosure is triggered whenever a rate, cost, or financing price is quoted based on information from a potential merchant recipient.
New York implemented laws on August 31, 2019, to safeguard merchants, prohibiting MCA funders from issuing a Confession of Judgment (COJ) to a New York resident and merchant. This proactive move aimed to prevent coercive practices and protect the rights of businesses utilizing MCAs.
Merchant Cash Advance Attorney NEW YORK J. Singer Law Group, PLLC, a New York Law Firm focusing on settling Merchant Cash Advance loans for clients across all 50 States and Merchant Cash Advance loans in NEW YORK.
J. Singer Law Group, PLLC, stands as an essential asset for enterprises navigating the Merchant Cash Advance (MCA) environment in New York. With expertise in resolving MCA loans nationwide, the legal firm aids clients in addressing issues such as ACH payments, personal guarantees, Confessions of Judgment (COJs), and other related challenges.
As the epicenter of finance, New York plays a pivotal role in the Merchant Cash Advance industry. Understanding and complying with the evolving legal landscape is crucial for MCA funders and businesses seeking capital. J. Singer Law Group, PLLC, stands as a guiding force, helping companies to navigate the complexities and solve MCA-related challenges in New York and beyond.
Commercial Finance Disclosure Law (CFDL)
The CFDL in New York, effective since August 1, 2023, extends disclosure requirements, typically associated with consumer lending, to commercial financing instruments, including MCAs. Importantly, these regulations uniformly apply to both MCA brokers and funders.
Key Aspects of the CFDL
Bank Exception
MCA entities predominantly owned by a financial institution, especially a depository bank, are exempt from the CFDL. This exception underscores the significance of collaborations with FDIC-insured banks for MCA funders.
New York Nexus
The final rules define the geographical scope triggering the CFDL's applicability, narrowing it down to where a transaction occurs or the involved parties' location. This limitation helps in clarifying the jurisdiction for compliance.
MCA Recipient Location
The CFDL applies to transactions where the recipient is managed or directed from New York or is a resident of New York. Like in other states, relying on the business address provided by the recipient becomes a pivotal determinant.
Assignment and Broker Compensation Disclosure
The law allows MCA funders to assign their rights in the MCA contract. In cases involving a broker, the final rules mandate a clear written disclosure of how and by whom the broker will be compensated.
Finance Charge Calculation
The CFDL obligates the calculation and disclosure of the finance charge on a transaction, encompassing fees charged by the MCA funder for underwriting and origination.
SB 1235 and APR Disclosure
New York enacted SB 1235 ahead of the curve, requiring particular revelations for business financiers and MCA providers. Notably, the state distinguishes itself by requiring the disclosure of an Annual Percentage Rate (APR), departing from the previously used Annualized Cost of Capital (ACC). This disclosure is triggered whenever a rate, cost, or financing price is quoted based on information from a potential merchant recipient.
Legal Protections for New York Merchants
New York implemented laws on August 31, 2019, to safeguard merchants, prohibiting MCA funders from issuing a Confession of Judgment (COJ) to a New York resident and merchant. This proactive move aimed to prevent coercive practices and protect the rights of businesses utilizing MCAs.
Merchant Cash Advance Attorney NEW YORK J. Singer Law Group, PLLC, a New York Law Firm focusing on settling Merchant Cash Advance loans for clients across all 50 States and Merchant Cash Advance loans in NEW YORK.
Merchant Cash Advance Attorney in New York
J. Singer Law Group, PLLC, stands as an essential asset for enterprises navigating the Merchant Cash Advance (MCA) environment in New York. With expertise in resolving MCA loans nationwide, the legal firm aids clients in addressing issues such as ACH payments, personal guarantees, Confessions of Judgment (COJs), and other related challenges.
As the epicenter of finance, New York plays a pivotal role in the Merchant Cash Advance industry. Understanding and complying with the evolving legal landscape is crucial for MCA funders and businesses seeking capital. J. Singer Law Group, PLLC, stands as a guiding force, helping companies to navigate the complexities and solve MCA-related challenges in New York and beyond.
Chapter 7 bankruptcy income limits are based on the means test, which compares your household income to your state’s median income. If your income is below the median, you typically qualify. If it is above, additional expense calculations may still allow eligibility.
The cost of Chapter 7 bankruptcy generally includes a court filing fee, required education courses, and attorney fees that vary based on case complexity. Total costs depend on income level, assets, and whether issues arise during the case.
Chapter 7 bankruptcy can stop merchant cash advance lawsuits immediately through the automatic stay and may discharge personal liability for MCA debt, depending on the contract and business structure.
To qualify for Chapter 7 bankruptcy, you must pass the means test, demonstrate limited disposable income, complete credit counseling, and meet timing rules related to prior bankruptcy filings. Your assets must also fall within exemption limits.
To find a reputable Chapter 7 bankruptcy attorney, look for a lawyer who focuses primarily on bankruptcy law, has experience handling Chapter 7 cases in your state, offers transparent pricing, and provides clear explanations without pressure or unrealistic promises.
Chapter 7 bankruptcy typically discharges unsecured debts such as credit card balances, medical bills, personal loans, utility arrears, payday loans, and certain judgment debts. It does not usually eliminate child support, alimony, most student loans, or recent tax obligations.
Can Chapter 7 bankruptcy help with merchant cash advance debt? Yes. Chapter 7 bankruptcy can eliminate personal liability for merchant cash advance debt in many cases, stop lawsuits and collections, and provide immediate relief through the automatic stay.
Trying to choose between a merchant cash advance and a business loan? Learn the real differences in cost, risk, and repayment, and how J. Singer Law Group can help if MCA debt is already out of control.
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Searching for an “MCA lawyer near me”? Learn what to look for in a merchant cash advance attorney and how J. Singer Law Group in New York can help protect your business.