As someone who’s been on the frontlines defending business owners, I can tell you Merchant Cash Advances (MCAs) are dangerous, plain and simple. The way they sneak up on you—it’s devastating. And when MCA lenders hit? They hit hard. You think it’s just cash flow, but suddenly, they’re coming for your customers, your bank accounts, your vendors. They throw UCC liens at you like candy, but not the good kind—it’s the candy you choke on.
MCA lenders love to file UCC liens—and believe me, they will.
They file them fast.
In Illinois, this is often done without proper notice, freezing your receivables before you can blink.
An attorney like me knows how to challenge them. We’ve done it many times. I’ve seen UCC liens tear businesses apart.
A vendor stops payment because they got a notice from the MCA lender. It’s crippling. But if that lien wasn’t filed properly? We can get it wiped. And that’s a win—partial or full.
How MCA Cases Are Won
How do we win these cases? We argue it’s not a receivable sale, it’s a disguised loan. A real sale of receivables has risk. If your sales drop, the buyer takes a hit. But in MCAs, they still take the same payment. That’s a loan. It’s all about the risk. The key is proving the MCA provider had no real risk. If they’re guaranteed a return, it’s a loan. And if it’s a loan, Illinois law says they can’t charge outrageous rates. That’s when we start negotiating down that debt. In Illinois, usury laws kick in when an MCA is recharacterized as a loan. Illinois caps interest rates at 9% under the Illinois Interest Act. You think an MCA falls under 9%? Not even close. That’s a ticket to voiding the contract.
And once that usury defense is up, the whole contract falls apart. MCAs aren’t supposed to guarantee fixed returns. That’s not a sale of receivables; that’s a loan. And if it’s a loan, the Illinois Interest Act makes it void. That’s how we win. Let’s look at the case of LG Funding LLC v United Senior Properties of Olathe, LLC. The court found that fixed payments without reconciliation look a lot like a loan—enough that it triggered usury laws. We use this precedent to challenge MCAs in Illinois. But wait—there’s more. In Illinois, usury laws kick in when an MCA is recharacterized as a loan. Illinois caps interest rates at 9% under the Illinois Interest Act. You think an MCA falls under 9%? Not even close. That’s a ticket to voiding the contract.
Case Example: Kapitus Servicing Inc.
I remember this one case—Kapitus Servicing, Inc. v Suburban Waste Services, Inc. The MCA contract was so bad, it was practically begging to be voided. They called it a “sale of receivables,” but fixed daily payments? That’s a loan, and that’s where we hit them. In Kapitus Servicing, Inc. v Suburban Waste Services, Inc., the court ruled that a “reconciliation clause” wasn’t enough because it was never actually used. If the clause is there but never invoked, it doesn’t protect the lender.
Finding Flaws in MCA Agreements
MCA defense is like finding the weak link in the chain, and trust me, there’s always a weak link. Whether it’s UCC liens, improper filings, or failure to reconcile—MCA agreements have flaws. And we exploit every single one of them. We fought back by challenging the validity of the UCC lien. The MCA provider didn’t follow proper filing procedures under Illinois UCC law. Without that lien, they had no way to force payment from my client’s customers. We got the lien voided.
The Illinois Uniform Commercial Code (UCC) is another powerful tool in our toolbox. UCC liens can tie up your business in knots, but they have to be properly filed. If the lender skips a step, we have grounds to challenge the lien. Now, let’s talk about Illinois laws specifically. Under Illinois’ Interest Act, MCAs can be voided if they charge more than the legal interest cap. We’ve used this exact law to reduce debts. Look up Illinois Interest Act (815 ILCS 205/4).
Fighting Back With Legal Tools
The Illinois Interest Act and UCC laws have real teeth. But you need a lawyer who knows how to use them. It’s not just about the law—it’s about knowing when and how to apply it, in the right context. That’s where we come in. I always tell business owners, “Don’t let the lender bully you with fancy legal terms.” If an MCA agreement feels off, it probably is. The fixed payments, the lack of reconciliation—they’ll call it a receivable sale, but we know better. When we sit down with MCA providers, we’re not begging for a reduction—we’re demanding it based on legal facts and precedents. And believe me, that changes the conversation entirely.
It’s about partial wins too. You don’t have to wipe out the entire debt. You can chip away. Get the penalties reduced, eliminate some of the fees, restructure the payments. I’ve saved businesses just by negotiating down the massive default fees.
Why Partial Wins Matter
Partial wins matter. Think about it this way—if you can reduce a $100,000 debt to $50,000, that’s a win. Even if you don’t win the full case, you’ve bought yourself time, and you’ve saved your business. That’s how MCA defense works. But here’s where it gets tricky—some lenders will throw in “reconciliation clauses,” claiming they’ll adjust the payments based on your sales. That sounds fair, right? Wrong. Often, these clauses are a smokescreen.
When we sit down with MCA providers, we’re not begging for a reduction—we’re demanding it based on legal facts and precedents. And believe me, that changes the conversation entirely. The Illinois Interest Act and UCC laws have real teeth. But you need a lawyer who knows how to use them. It’s not just about the law—it’s about knowing when and how to apply it, in the right context. That’s where we come in.
Act Fast to Save Your Business
It’s not just about voiding the contract. It’s about debt restructuring, reduction in penalties, and freeing up receivables. It’s about making sure your business keeps going, even if the win isn’t 100%. That’s how we fight. The key is to act fast. The longer you wait, the more damage the MCA provider can do. If they freeze your accounts, it’s harder to fight back. But if you catch it early, we can stop them before they do too much harm.
Call me at 212-210-1851 if you’re facing MCA debt. I’ve helped countless businesses fight back and win. Whether it’s through restructuring, debt reduction, or fighting in court, we’ll find a way to protect your business. I’ve seen businesses crushed by MCAs, but I’ve also seen them saved. And the difference? It’s all about having the right defense. Knowing the law, knowing the flaws in these agreements, and knowing how to turn the tables on the MCA provider.
