FREE MCA CONTRACT ANALYSIS
What's Your MCA Really Costing You?
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Sample Report
Effective APR
187%
Advance → Repayment
$50,000 → $72,500
HOW IT WORKS
Three Steps to Contract Clarity
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THE MCA INDUSTRY
What Every Borrower Should Know
$12-20B
Annual MCA Market
The merchant cash advance industry processes billions annually. Many borrowers sign agreements without fully understanding the effective cost.
40-350%
Typical Effective APR Range
Factor rates obscure the real annual cost. A factor rate of 1.35 on a 6-month advance translates to an effective APR over 100%.
100,000+
Distressed Borrowers Per Year
Industry estimates suggest over a hundred thousand small businesses struggle with MCA repayment obligations annually.
25%
NY Criminal Usury Cap
New York courts have ruled that certain cash advances with fixed daily payments may be classified as loans subject to the state's 25% criminal usury cap.
Recent Legal Developments
Courts Apply Loan Classification Test
Multiple New York courts have applied a three-factor test to determine whether an MCA is actually a loan: fixed payment amounts, a finite term, and a personal guarantee. When all three are present and the funder never adjusts payments based on actual receivables, courts have reclassified the advance as a loan subject to usury limits.
Confession of Judgment Restrictions
New York banned out-of-state enforcement of confessions of judgment in 2019 after investigations revealed widespread abuse. A confession of judgment allows a lender to seize assets without a court hearing — a clause still present in many active MCA contracts.
Reconciliation Failures Under Scrutiny
MCA agreements typically include a reconciliation clause promising to adjust daily payments if the borrower's revenue declines. Regulators and courts are increasingly examining whether funders actually honor these provisions. When they don't, the fixed-payment structure strengthens the argument that the advance is a loan.
State Regulatory Expansion
Multiple states are tightening MCA oversight. New disclosure requirements, registration mandates, and transparency rules are taking effect, giving borrowers new protections and legal avenues.
Don't Pay More Than You Have To
Courts are ruling that fixed daily payments without reconciliation may make your advance a loan subject to usury limits. See if your contract has red flags.