Are Merchant Cash Advances Legal in New Jersey, and if so, under what conditions? In New Jersey, the answer is yes, as long as the seller can collect the receivables. Further, the advance must have an indefinite term, meaning that the borrower can continue to repay the total as long as he or she needs the money. In Florida, advances must not resemble a loan, as the state has usury laws.
Under New Jersey law, the merchant cash advance is considered a small business loan, which is exempt from the state’s usury laws. However, lenders are encouraged to comply with the law by marketing the services as loans and making certain disclosures. Underwriting efforts typically look at the merchant’s credit rating and bank statements. Some providers may not reconcile repayments to ensure that the loan is paid in full.
The Skolnick Legal Group, P.C., a New Jersey law firm, is investigating whether MCAs are legal in the state. The attorneys’ firm has a number of clients in the New Jersey small business community. While the Skolnick Legal Group, P.C., LLP, represents businesses in Roseland, Hackensack, and midtown New York. These lenders often offer low-interest loans to businesses, but the credit requirements are stringent. The firms also claim that the practice does not violate state usury laws.
The lender will receive a portion of the revenue generated by the business. The small business owner may assume that the payments reflect the revenue generated by the business. However, in reality, most lenders set a fixed amount. This is important because the lender isn’t paying the same amount every day. In addition, the APR may increase as sales decline and the company cannot meet repayment terms. As a result, it can be very difficult to make a good profit on a merchant cash advance.