Kansas City Merchant Cash Advance Attorney
Getting a merchant cash advance can seem like a quick and easy way for small businesses to access capital in Kansas City. Unlike traditional bank loans, merchant cash advances don’t require a strong credit history or collateral. The merchant simply agrees to repay the advance through a percentage of their future credit card sales. But merchant cash advances come with some major drawbacks that Kansas City business owners need to look out for. That’s where working with an experienced Kansas City merchant cash advance attorney can help.
How Merchant Cash Advances Work
Here’s a quick rundown of how merchant cash advances work:
-- The merchant cash advance company provides an upfront lump sum to the business, usually between $5,000 – $500,000.
- In exchange, the business agrees to repay the advance through daily payments taken as a percentage of their credit card sales, usually between 10-20%.
- The payments continue until the full amount is repaid plus fees and interest, which can equal an equivalent annual percentage rate of 60-300%.
- The cash advance company takes the repayments directly from the business’s credit card receivables account through daily debits.
- There’s usually no fixed repayment term, the business repays the advance as quickly or slowly as their credit card sales allow.
While this flexibility and quick funding may sound appealing, merchant cash advances can become extremely expensive for Kansas City businesses. That’s why it’s critical to read the fine print and understand the full costs before signing any merchant cash advance agreement.
Problems with Merchant Cash Advances
Merchant cash advances seem straightforward on the surface, but several problematic issues can arise:
- High rates and fees – The equivalent APR is typically 60-300%, much higher than a bank loan.
- No fixed term – Repayment depends on credit card sales, which can drag out.
- Personal guarantees – Owners may have to personally guarantee repayment, putting their home and assets at risk.
- Aggressive collections – Cash advance companies can aggressively pursue repayments, including filing lawsuits.
With so many potential pitfalls, it’s easy for Kansas City businesses to get in over their heads with merchant cash advances. An experienced attorney can help you avoid these problems or find solutions if you’re already dealing with them.
Kansas Laws Related to Merchant Cash Advances
Depending on the specific terms and circumstances, a Kansas merchant cash advance attorney may be able to challenge agreements that violate these consumer protection laws:
-- Kansas Uniform Consumer Credit Code – Sets limits on loan rates and fees.
- Kansas Consumer Protection Act – Prohibits unfair, deceptive, or unconscionable practices.
- Kansas Fair Debt Collection Practices Act – Regulates debt collection methods.
Defenses Against Merchant Cash Advances
Some possible defenses and strategies that an attorney could use to dispute issues with merchant cash advances in Kansas City include:
- Usury claims – Argue the equivalent APR is illegally high under state lending laws.
- Unconscionability – Challenge unfair, deceptive, or abusive terms in the agreement.
- Breach of contract – Argue the cash advance company violated the agreement.
- Violations of state/federal law – Cite violations of lending, debt collection, or consumer protection laws.
- Improper service of process – Challenge errors made when suing or collecting judgments.
- Settlement negotiation – Negotiate a lump-sum payoff for less than the full balance.
- Bankruptcy – Use Chapter 7 or Chapter 11 to discharge part or all of the debt.
An attorney experienced with merchant cash advances will know how to analyze the agreement to spot potential violations and build a strong legal case for the Kansas City business owner.
Finding the Right Kansas City Merchant Cash Advance Attorney
Finding an attorney experienced with merchant cash advances takes some research. Here are a few tips:
- Ask for referrals from other local business owners who have dealt with merchant cash advances before.
- Check lawyer directories like Martindale-Hubbell and look for attorneys listed under “financial services law.”
- Search online for lawyers or law firms in Kansas City that mention merchant cash advances, business litigation, debt relief, etc. on their websites.
- Contact the Kansas City Metropolitan Bar Association and ask if they have a lawyer referral service or list of members specializing in this field.
Schedule consultations with a few potential attorneys to discuss your situation and make sure they have the right experience. Come prepared with copies of your merchant cash advance agreement and records of payments, fees, communications with the lender, etc. Ask direct questions about their specific experience handling cases like yours, the strategies they would use, and potential outcomes they could achieve. Gauge their responsiveness and how well they listen to your concerns.
An attorney well-versed in merchant cash advance issues should be able to explain the potential defenses and claims that could apply in your case and discuss realistic expectations. They should have a track record of positive results for their Kansas City business clients, whether that’s negotiating settlements, defending lawsuits, or challenging the agreements. They should also clearly explain their fees and billing practices upfront.
-Going into a consultation informed about the common merchant cash advance problems and prepared with your documents will help you have a productive discussion about your options. With an experienced Kansas City merchant cash advance attorney on your side, you can get the aggressive cash advance company off your back and potentially save your business.