In a nutshell, you need:
- contracts;
- bank statements/processor statements;
- written payoff letter;
- UCC search print out; and
- correspondence/court papers.
What documents are needed for MCA debt relief?
| What documents you need | Where to get these docs | Why you need these docs |
|---|
| All contracts, guaranty, addenda and state disclosure form | Your signing emails, or a written request to the funder | Determine if it is a sale or loan and subject to default |
| All bank statements/processor statements from date of each MCA funding | Your bank and processor | Know how much you’ve paid and to who |
| Written payoff letter | MCA funder or servicer | What they say you owe vs what you calculate |
| UCC Search print out | Your Secretary of State | Know all of your MCA funders and collateral |
| Correspondence & court papers | Email, texts, mail, the county clerk | Know if they are reconciling, what your broker said, any lawsuits, etc. |
What does a lawyer look for in a Merchant Cash Advance contract?
We have to determine if it is a sale or a loan. While it says it’s a purchase of your future receivables, New York courts look at the totality of the circumstances. Under LG Funding v. United Senior Properties, 2020 NY Slip Op 01607 (2d Dept 2020), the Court looked at (1) whether there is a reconciliation provision (2) is there a finite term and (3) is there recourse in bankruptcy. In July 2026, in In re Kossoff PLLC, a Southern District of New York bankruptcy court analyzed the 3 factors and re-characterized 19 Merchant Cash Advances as loans. The debtor was funded about $10.88 million and had to repay about $14.88 million. The Court found the reconciliation clause was at the MCA funder’s discretion and over-collections were never refunded. A fixed daily debit of $2,190.48 meant a finite term of approximately 189 days.
We also look at the exact language of the reconciliation clause (mandatory or at the funder’s sole discretion), how payments are made (fixed amount or percentage of receipts), what constitutes default, the breadth of your personal guaranty, what state controls the contract and where disputes must be brought, and the scope of the security interest. If you are a New York corporation, you cannot bring a civil usury action against a MCA funder under New York General Obligations Law 5-521, but you can bring criminal usury if the rate exceeds 25%.
We also need any state disclosure form you were given. New York’s Commercial Finance Disclosure rules require disclosure forms for any sale based financing of $2,500,000.00 or less. It must state how much they provided you, the estimated APR, the finance charge, prepayment terms, and if this is a renewal, how much finance charge was not paid from the prior advance. Florida (Florida Statute 559.9613), Texas and California also have disclosure forms.
How far back should your bank statements go?
All of them from the date you received each MCA. The 3 months they asked for when you applied won’t show how much you have paid. We also check whether your payments stayed fixed while your deposits decreased, another factor the Kossoff Court treated as a sign of a loan. We will also see if you are being charged stacking and NSF fees. Make sure you know the debitor names on your bank statements. Yellowstone, for example, had 25 subsidiaries, and the New York Attorney General told merchants to check their bank statements to determine if Yellowstone funded them.
Why should you get the MCA payoff amount in writing?
Ask the MCA company in writing to provide you the payoff amount, where to wire/ACH funds and the date daily debits will stop. To estimate it, subtract the total debits on your bank statements from the total amount purchased in the contract. For example, if the contract is for $150,000 and the total debits are $95,000 then the payoff should be approximately $55,000. If they claim more, ask the MCA provider to show the calculation. When you pay it off, make sure to receive a letter stating the balance is zero and they will file a UCC 3 to terminate the UCC.
What does a UCC search show about your MCA debt?
A UCC search shows all of the MCA funders, servicers and assignees who have filed a lien on your business and what they took as collateral, whether it was all business assets or accounts receivables. The UCC is good for 5 years under UCC 9-515, so the filing date tells you if it is live. If a funder won’t terminate a UCC after it has been paid off, by law it must do so within 20 days of written demand under UCC 9-513, unless the accounts were sold.
Which emails, texts and court papers should you keep?
Save all written correspondence regarding the MCA advances, including any requests for reconciliation. A reconciliation request the provider ignored or denied may be a factor the court weighs in deciding your case. Save all text messages with your broker. In 2024 the FTC was awarded a $20.3 million judgment against a MCA operator for deceiving businesses about how much they would receive. New York requires MCA providers to disclose in writing how the broker is paid. Save any court papers served on you, such as a Summons, Restraining Notice or bank levy. It is much harder to overturn a default judgment.
Frequently Asked Questions
What if I do not have a copy of my MCA contract?
Request the complete contract from your MCA provider in writing. If you signed online, search your email for the e-signature link. In New York, for sales-based financing of $2.5 million or less, the MCA provider is required to retain each signed disclosure for at least 4 years.
Can I ask for an accounting from my MCA funder?
Under UCC 9-210, you can request an accounting of the unpaid obligations secured by the UCC and the MCA provider has 14 days to respond. You can ask for this once every 6 months for free, and they can charge up to $25 for further requests. However, 9-210 does not apply to a buyer of accounts or payment intangibles, and MCA providers claim they are a buyer of your receivables, so they may deny your request.
How will I know if I signed a confession of judgment?
Look through your MCA documents for an affidavit that states the county you live in and allows judgment against you. Under NY CPLR 3218, that affidavit can only be filed with the clerk in the county you listed and within 3 years of the date you signed it. Under Texas House Bill 700, effective September 1, 2025, a confession of judgment in a commercial sales-based financing transaction is void.