Merchant cash advance (MCA) agreements have become a dominant source of alternative financing for small and mid-size businesses. Structured as purchases of future receivables rather than traditional loans, these transactions have long operated in a regulatory gray zone.
Growing Body of Case Law Forcing MCA Reckoning
A growing body of case law, including recent bankruptcy court decisions, is forcing a reckoning on merchant cash advances. When an MCA provider’s claim comes before a bankruptcy court, the fundamental question often becomes: Is this really a sale, or is it a loan in disguise?
By
Robert W. Dremluk
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