Arkansas MCA Defense Lawyers and Business Debt Relief
Small businesses are the backbone of the American economy, providing jobs and economic growth in communities across the country. However, many small business owners struggle with cash flow and access to financing, making them vulnerable to predatory lending practices like merchant cash advances (MCAs).MCAs can seem like an easy fix when money is tight, but they often trap business owners in cycles of debt with exorbitant interest rates and aggressive collection tactics. The good news is that Arkansas business owners have legal defenses to fight back against MCA abuse.
How Merchant Cash Advances Work
A merchant cash advance provides an upfront lump sum to a business in exchange for a percentage of future credit card sales over a set period of time. The advances are repaid automatically through daily or weekly debits from the business’s merchant account.
- High interest rates – MCAs often charge the equivalent of 60-300% APR in fees and interest
- Short repayment terms – Many MCA contracts require full repayment in under a year
- Daily/weekly payments – Repayments are taken directly from credit card sales revenue
- No underwriting – Approval is based on credit card volume, not ability to repay
This structure allows funders to advance money quickly without traditional underwriting, but it also sets up many businesses to fail. The payments are designed to debit so much from daily revenue that merchants get caught in cycles of debt and constantly needing new advances to stay afloat.
Arkansas MCA Legal Protections
While federal regulation of MCAs has stalled in recent years, Arkansas does have some state laws that protect consumers from predatory lending. However, most of these statutes only cover personal loans and exclude commercial financing.
- Usury limits – Arkansas caps personal loan interest rates at 17% APR under the state constitution
- Payday lending protections – Payday loans charging over 17% interest are illegal in Arkansas
- Debt collection laws – Prohibit harassment/deception and allow damages for violations
So while there are no MCA-specific statutes in Arkansas yet, working with an experienced attorney can help business owners assert their rights under more general commercial and banking laws.
Fighting Back Against MCA Abuse
If you signed an MCA contract under false pretenses or your payments have become unmanageable, there are legal strategies to reduce or eliminate your obligation to repay. An attorney can review your agreement to spot improper terms or deceptive language and build a case against the funder.
Unconscionability
Courts can rule contract clauses “unconscionable” if the terms unreasonably favor one party over another. Attorneys may argue that an MCA’s fees, rates, or repayment structure are unfair enough to invalidate the agreement.
Misrepresentation
If a broker or funder misled you about repayment amounts, ability to prepay, or other key terms, that may constitute fraud or misrepresentation. This can make the contract void or entitle you to damages.
RICO violations
Perpetrating schemes across state lines to defraud merchants can violate federal racketeering laws. If a funder uses systemic deception, attorneys can threaten or file RICO lawsuits to get MCA debts waived.
Settlement and Debt Reduction Strategies
Rather than risk an expensive legal battle, many funders are open to negotiating settlements for significantly less than the merchant owes. Skilled attorneys apply pressure through litigation threats and appeals to the funder’s desire to avoid further legal costs or public backlash.Settlements typically reduce the merchant’s outstanding balance by 25-75% while waiving any future payments or obligations. The process provides immediate financial relief and allows the business to move forward.
Finding the Right Arkansas MCA Attorney
Fighting MCA abuse requires understanding complex commercial litigation and debt laws across jurisdictions. It’s important to work with a law firm that specializes in representing merchant borrowers nationwide.Ask any attorney you consider:
- Do they have extensive experience settling/litigating MCA cases?
- Can they provide merchant references and testimonials?
- Will they review your agreement for free?
- What are their rates and fee structure?
Avoid any firm that charges upfront fees before reviewing your case. The right MCA lawyers work on a contingency fee basis, meaning they only collect if money is recovered for you.
Delancey Street’s Arkansas MCA Defense Program
The legal team at Delancey Street leverages over 20 years of experience representing merchants in disputes with MCA lenders nationwide. Their debt relief program partners with local Arkansas attorneys to build the strongest case for each client based on their specific situation and jurisdiction.Services include:
- Free case review and contract analysis
- Investigation into deceptive sales tactics
- Demand letters invoking legal defenses
- Settlement negotiations to reduce/eliminate debt
- Referral to litigators if necessary
Delancey Street also takes an empathetic approach and provides emotional support during a difficult process. Their debt relief experts are always available to answer questions and will regularly update clients on the status of negotiations.While an MCA may feel hopeless, Delancey Street has resolved over $300 million in small business debt and helped thousands of merchants move on with their lives. To speak with a member of their legal team at no cost, call 212-210-1851 or visit https://www.delanceystreet.com.
Frequently Asked Questions
Can I get my MCA contract canceled? Potentially yes, if there is evidence of unlawful business practices or you were deceived about key terms. An attorney can review for ways the agreement can be invalidated.What if I already have a judgment against my business?Judgments can often be vacated or set aside if there are legal issues with how it was obtained. Time is of the essence though, so engage counsel quickly.Should I just file for bankruptcy?Bankruptcy can eliminate MCA debt but also comes with long-term consequences. Most merchants prefer to attempt settlement first, then explore bankruptcy as a last resort with an attorney.Can’t I negotiate directly without a lawyer?You can try, but funders are accustomed to handling borrowers directly and rarely offer reasonable settlements without legal pressure. Experienced counsel drastically improves outcomes.How long does the legal process take?The timeline varies based on jurisdiction, court backlogs, and complexity of your case. However, settlements often happen within 2-3 months once attorneys get involved.
Key Takeaways
- Merchant cash advances lead to spiraling debt for many small businesses
- Arkansas has commercial protections against predatory lending
- Unconscionability, fraud, and RICO violations are possible defenses
- Skilled attorneys can negotiate settlements for substantial savings
- The legal team at Delancey Street helps merchants nationwide
Fighting abusive MCA debt takes courage, but legal help can empower business owners to resolve their situations, save their companies, and thrive again. Arkansas merchants have strong defenses on their side. Contact Delancey Street today to understand all of your rights and options—the consultation is 100% free.
