A merchant cash advance (MCA) can look like fast, easy money when your Wisconsin business needs cash — but many owners quickly find the daily withdrawals impossible to sustain. If an MCA is draining your account and threatening your business, attorney Nathan DeLadurantey can help you understand your options. Consultations are free.
What is a merchant cash advance?
An MCA is not structured as a traditional loan. Instead, the funding company advances a lump sum in exchange for the right to collect a portion of your business's future sales or receivables, usually through fixed daily or weekly ACH withdrawals from your bank account. Because it is framed as a "purchase of receivables" rather than a loan, MCA companies often argue that interest-rate and lending laws do not apply.
Why MCAs become a problem
- Extremely high effective cost. When you convert the fees and short repayment window into an annualized rate, many MCAs carry the equivalent of triple-digit interest.
- Daily debits that choke cash flow. Fixed daily withdrawals continue regardless of how your business is actually performing.
- Stacking. Businesses often take a second or third MCA to cover the first, compounding the problem.
- Personal guarantees and confessions of judgment. Many contracts require a personal guarantee, and some historically used confessions of judgment that let the company obtain a judgment with little notice.
Your potential legal options
Every situation is different, but depending on the facts, a business may be able to:
- Challenge whether the MCA is really a "true sale" or a disguised loan. Courts increasingly look at features like reconciliation provisions and whether repayment is genuinely contingent on sales. If a court finds the arrangement is actually a loan, usury and lending laws may come into play.
- Negotiate a settlement or restructured payoff to reduce the daily burden and resolve the balance.
- Defend against collection lawsuits and judgment enforcement.
- Review the contract for breaches, misrepresentations, or unenforceable terms.
Important: MCAs are made to businesses, so many consumer-protection statutes that apply to personal debt do not automatically apply here. That is exactly why it helps to have the specific contract and facts reviewed before you decide what to do.
Talk to a Wisconsin MCA attorney — free
If your Wisconsin business is struggling under one or more merchant cash advances, don't wait until your accounts are frozen or a judgment is entered. Contact attorney Nathan DeLadurantey for a free, confidential consultation at 414.377.0515.
Related resources
If debt is part of the bigger picture, these pages may help: Chapter 128 debt repayment plans, dealing with debt collectors in Wisconsin, and what to do if you are sued for a debt. You can also contact us for a free consultation.