The best business debt settlement companies in New York will know how to use New York laws to settle your merchant cash advance debt. They will obtain your signed disclosure forms, look for a confession of judgment in county clerk records, and engage a New York lawyer to plead criminal usury if you are sued.
Many MCA contracts choose New York law and courts, so these laws may apply even outside New York, though each reaches different owners. Your state’s laws also apply (for example, see our New Jersey business debt settlement guide).
Which New York laws will help you with your merchant cash advance debt if you are not in New York?
It depends on the law. The disclosure law applies if your business is managed in New York, the confession of judgment law if you reside in a New York county, and the usury law if New York law governs a contract of $2.5 million or less and the advance is recharacterized as a loan.
| New York law | How it can help you | Who it covers | Who can help you |
|---|
| Commercial Finance Disclosure Law | Funder must have your signed OFFER SUMMARY showing estimated APR | Businesses managed from New York | Settlement company, or you (NYDFS complaint) |
| CPLR 3218(b) | Confession of judgment can only be filed in the county where you reside | New York county residents, including businesses located there | New York lawyer, to vacate the judgment |
| Penal Law 190.40 | A recharacterized loan yielding more than 25% per year is void | Contracts of $2.5 million or less governed by New York law | New York lawyer, as a defense when the funder sues |
| Yellowstone settlement | All $534,552,724 in debt canceled | Borrowers from Yellowstone or its 25 controlled entities | Anyone checking funder names |
What does New York's Commercial Finance Disclosure Law require of MCA funders?
Since August 1, 2023, any company offering sales-based financing to a business principally directed or managed in New York must give it a disclosure headed “OFFER SUMMARY” and obtain its signature. See Financial Services Law Section 803 and 23 NYCRR Part 600.
The Department of Financial Services enforces the law with penalties of up to $2,000 per violation, or up to $10,000 if willful, under Financial Services Law Section 812. It does not let you sue or void the agreement, but a missing disclosure gives you documentary evidence to use in negotiating and grounds to complain to the Department.
Can a funder still file a confession of judgment against you in New York?
Yes, if you or your business resides in a county in New York. Since August 30, 2019, a confession can only be filed with the clerk of the county where your affidavit stated you resided, within three years of the affidavit (CPLR Section 3218). A business “resides” in any county where it has a place of business. Setting aside the judgment takes a new lawsuit alleging fraud or a false affidavit (Oakshire Properties, LLC v. Argus Capital Funding, LLC, 4th Dept., 2024), which only a New York attorney can file. Without a New York residence, learn whether an out-of-state funder can use one against you, and New York City businesses can see our New York City guide.
When can your business raise usury against a merchant cash advance?
Usury is a defense your business can raise if a court recharacterizes the MCA as a disguised loan and the rate exceeds the criminal rate. G.O.L. 5-521 bars a corporation or LLC from raising any usury defense other than criminal usury, which is above 25% per year under Penal Law 190.40.
The 2nd Department addressed this in LG Funding, LLC v. United Senior Properties of Olathe, LLC (2d Dept. 2020). LG Funding paid $100,990.00 for $129,267.20 in future receipts (a factor of 1.28), collected from 15% of daily revenue and capped at $2,499 per week. Because reconciliation was at LG Funding’s “sole discretion” and bankruptcy let it seek the entire amount, the borrower kept its usury defense, though its counterclaim was dismissed. To test your contract, see our usury and disguised loan defense guide.
In October 2021, the Court of Appeals held in Adar Bays, LLC v. GeneSYS ID, LLC that a criminally usurious loan is void ab initio, so the lender cannot collect even the principal. Recovering money is harder: in February 2026, the 1st Department vacated a $77.3 million restitution award against Richmond Capital and sent it back to exclude principal.
What happened with the Attorney General’s settlement with Yellowstone Capital?
On January 22, 2025, the Attorney General announced a $1.065 billion judgment against Yellowstone Capital, 25 controlled entities, and two executives, who were banned from the industry. It said Yellowstone charged up to 820% to over 18,000 businesses, including over 1,100 in New York. Check whether any funders on your list are part of the settlement on the Attorney General’s Yellowstone settlement page.
How should you choose among business debt settlement companies in New York?
Ask the company to request your OFFER SUMMARY, the broker compensation disclosure, the reconciliation and default clauses, and any confession of judgment affidavit. The company can negotiate for you, but it cannot defend a lawsuit for your LLC or file an action to vacate the confession, so ask which firm it uses to litigate in New York. Avoid any company that:
- tells you to stop paying without first checking for a confession filed in the county you listed;
- says usury automatically voids the MCA without explaining recharacterization and the 25% rate; or
- says S2305 has been passed into law.
Frequently Asked Questions
Does the Commercial Finance Disclosure Law void my MCA?
No. The law does not void the contract; the Department of Financial Services imposes penalties instead. If you never received an OFFER SUMMARY, complain to the Department and use that to negotiate.
Has New York passed a law banning confessions of judgment?
Not yet. S2305, which would ban confessions of judgment for consumer debts or debts under $5,000,000 in principal, passed the Senate in March 2025 and again in May 2026, but as of September 2026 it remains in the Assembly Judiciary Committee.
I had a Yellowstone MCA. Do I still owe it?
No. Your debt was canceled under the Attorney General’s settlement, and you should not pay anyone to “settle” it. The deadlines to request lien terminations and file claims have passed, and restitution was distributed on April 3, 2026.
Can my LLC file a lawsuit against the funder for usury?
Generally, no. In LG Funding, the 2nd Department allowed the business to raise criminal usury as an affirmative defense but dismissed its usury counterclaim, so you can only use usury when the funder sues you.