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How to Protect Your Clients Against Predatory Merchant Cash Advances That Are Quietly Killing Small Businesses
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Over the past several years, the merchant cash advance (MCA) industry has grown substantially, fueled by small and middle market businesses needing quick financing once COVID-relief programs ended, with creative and aggressive lenders waiting to meet those needs. Bad actors exist in every industry. In January 2025, New York Attorney General Letitia James announced a $1 billion settlement with an MCA, cancelling MCA loans for more than 18,000 small businesses nationwide. However, even legitimate funders pose unique legal and business issues. Large credit card processors such as PayPal, Shopify and even Amazon now offer MCAs, which provide certain credibility to MCA products. MCAs (whether legitimate or not) are quietly killing businesses. Before considering legal options for businesses that have secured MCAs, it is important to understand what an MCA is and why it poses a risk.
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