Merchant Cash Advance's in Texas
A Merchant Cash Advance in Texas, like most states, is exempt from the state’s usury laws. As a result, small business owners are selling a portion of their future credit card sales for a current discounted price.
The resulting interest rate paid by Texas small business owners is usually in excess of 50% APR. The lack of regulation in Texas over Merchant Cash Advance Companies necessitates the assistance of a Texas merchant cash advance attorney. Let our merchant cash advance attorneys level your playing field with these Merchant Cash Advance companies.
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Why do Texas businesses turn to Merchant Cash Advances as a source for funding?
The most common reason is the promise made by these Merchant Cash Advance Loan companies to fund your Texas business within 24 hours from receipt of your application. This quick turnaround time makes the Texas merchant cash advance seem like a reasonable option.
However, shortly after receiving the funds, many Texas business owners find themselves unable to repay the exorbitant interest rates attached to these advances. This sets off a dangerous cycle of stacking advances, ultimately leading to the unfortunate necessity of shutting down their operations.
By hiring an experienced merchant cash advance attorney, we will be able to stop this cycle and consolidate your existing merchant cash advances so your business can thrive.
Merchant Cash Advance (MCA)
The surge in popularity of the Merchant Cash Advance Industry stems from its appeal as a swift fix for businesses grappling with financial struggles and cash flow issues. However, the reality is that these advances often spell disaster for businesses. While Merchant Cash Advance companies boast about the speedy infusion of funds into your business account, they conveniently gloss over the exorbitantly high interest rates associated with these advances.
On average, Merchant Cash Advances come with interest rates ranging from 35% to 49% over a period of 90 to 120 days. This translates to an Annual Percentage Rate (APR) exceeding 100%. Can such costly financing ever truly benefit a company? The resounding answer is "NO."
Merchant Cash Advance Consolidation in Texas?
In Texas, there's no need for a license to operate as a Merchant Cash Advance lender. This lack of regulation means these companies operate without oversight or scrutiny of their business practices. As a result, Merchant Cash Advance Loan companies in Texas regularly offer loans to businesses that lack the means to repay them.
This situation forces businesses into a cycle of taking out additional merchant cash advances just to cover the payments on their initial loans. Unfortunately, this vicious cycle often spells the end for Texas businesses. At businessdebtcounsel.com, we intervene to break this cycle by taking charge of the relationship with your lender. Once lenders realize they must cooperate with our company, we typically succeed in consolidating a Texas business's numerous advances and returning it to profitability.
Is debt choking Your Company in Texas?
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Don't be deceived: every Merchant Cash Advance company's primary objective is to turn a profit. Your Texas business's struggle to meet its financial obligations is of little concern to these companies; all they care about is whether you'll manage to repay most or all of your merchant cash advance before being forced to shut down.
Unlike traditional bank loans, where borrowers must undergo a rigorous "underwriting" process to ensure their ability to repay the loan, the Merchant Cash Advance industry operates without regulation and lacks such scrutiny.
As a result, businesses are resorting to merchant cash advances with sky-high interest rates and hefty fees, setting themselves up for repayment challenges they likely won't be able to overcome.
Why do Texas Businesses Apply for Merchant Cash Advances?
There are several factors that make Texas merchant cash advances attractive.
01
Flexible Repayment Structure
Unlike traditional loans in Texas with fixed monthly payments, MCAs typically offer a flexible repayment structure. Repayments are often tied to the business's daily credit card sales or overall revenue, meaning that during slower periods, the repayment amount adjusts accordingly. This flexibility can help a Texas business alleviate cash flow pressure, especially those with fluctuating sales volumes.
02
Quick Access to Funds
Obtaining a merchant cash advance usually involves a quicker approval process in Texas compared to traditional loans. This rapid access to funds can be crucial for businesses facing urgent financial needs or opportunities, such as purchasing inventory, covering unexpected expenses, or seizing growth opportunities.
03
No Collateral Required:
Traditional loans often require collateral, such as property or equipment, to secure the financing. In contrast, Texas merchant cash advances are typically unsecured, meaning businesses don't have to put up collateral to qualify. This can be particularly beneficial for businesses that lack valuable assets to use as collateral or those that prefer not to risk their assets.
04
High Approval Rates
In Texas, Merchant cash advances are often more accessible to businesses with less-than-perfect credit histories or limited financial track records. While traditional lenders may scrutinize credit scores and financial statements, MCA providers primarily consider the business's credit card sales or revenue performance. As a result, businesses with lower credit scores or shorter operating histories may still qualify for an MCA.
05
No Fixed Monthly Payments
Unlike traditional loans that require fixed monthly payments regardless of business performance, MCAs typically involve variable payments based on a percentage of daily credit card sales or overall revenue. This payment structure means that during slower sales periods, businesses pay back less, easing the financial burden. Conversely, during periods of higher revenue, businesses may repay the advance more quickly.
While merchant cash advances offer these advantages, it's essential for businesses to carefully weigh the costs and terms associated with MCAs against their specific financial needs and circumstances. Additionally, businesses should consider seeking advice from an experienced Texas merchant cash advance lawyer.
Texas Merchant Cash Advance
Texas usury laws apply to loans made to individuals rather than to business entities. These laws set limits on the amount of interest that can be charged on consumer loans to protect individuals from excessively high interest rates.
However, they generally do not apply to business loans, which are subject to different regulations and are typically governed by the terms of the loan agreement between the lender and the business.
Business loans often involve higher amounts and more complex terms compared to consumer loans, and they are typically negotiated between the lender and the business borrower. While there may be some regulations governing business lending practices, such as those related to unfair or deceptive practices, they are generally less strict than those governing consumer lending.
Because of this loophole in the Texas usury law, Merchant Cash Advance companies are able to charge interest rates in excess of 50% APR. Sometimes the Merchant Cash Advance companies make the advance appear as a sale of future credit card sales. This is just a ploy and used to create “window dressing”.
The Texas small business will be forced to pay an exceedingly high interest rate even in the event that the business has reduced credit card sales.
The best option for a Texas business is to hire a Texas merchant cash advance attorney with experience in all facets of Texas merchant cash advance law.
Our attorneys will first closely review your merchant cash advance contract to see if it complies with Texas law. In the next stage, we will contact your merchant cash advance lenders and begin the cash advance consolidation process. In the end, you will be in a situation where you can afford your payments which will allow your business to thrive
People Are Asking
What's the Difference Between a Merchant Cash Advance and a Loan?
A merchant cash advance can be in the form or a “sale of future revenues”, or an old fashion loan. The one common denominator is the exceedingly high interest rate that your business will pay on the money that it receives. The Merchant Cash Advance Companies are able to charge such high interest rates due to a loophole in the law which excludes businesses from Texas usury laws.
What Happens if I Default on an MCA Payment?
Defaulting can lead to some significant problems, so it's imperative to contact our team before that happens. Even if you call us after the fact, we can still help you get out of the choke hold these companies can have on your business.
Do I Need an MCA Attorney to Settle My Loan Debt?
If you're struggling to make payments and need to adjust your loan terms, the best option is to work with an attorney. Think of it this way—the MCA lender will have their own lawyers, so you are evening the playing field.
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