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Merchant Cash Advances Face Heightened Scrutiny In NJ After Yellowstone Capital

New Jersey’s enforcement posture, reflected in the Yellowstone action, mirrors bankruptcy courts’ long-standing insistence on examining economic substance over contractual form. Taken together, these developments reflect a broader national reassessment of MCA structures that emphasize repayment certainty while minimizing genuine risk transfer.

6 minute readMarch 31, 2026 at 11:05 PM
By
Jaclynn N. McDonnell
& R. Edward Stone III
Merchant Cash Advances Face Heightened Scrutiny In NJ After Yellowstone Capital

Merchant cash advances (MCAs) have become a dominant source of alternative financing for small businesses unable to obtain funds from traditional lending sources. Structured as purchases of future receivables rather than loans, MCAs are marketed as fast, flexible, and outside conventional lending regulation.

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