The best business debt settlement companies in Rhode Island will understand how Rhode Island’s usury laws may apply to MCAs, and how the homestead exemption may protect a guarantor’s house in Rhode Island.
Does Rhode Island's usury law apply to business borrowers?
Rhode Island General Laws 6-26-2 provides that no “person, partnership, association, or corporation loaning money” may charge interest above the greater of 21% per annum or the Wall Street Journal prime rate plus nine percentage points. The statute does not exempt loans made to corporations or LLCs from its usury cap. However, 6-26-2(e) lifts the cap for commercial loans over $1,000,000 that are not secured by the borrower’s principal residence, but only if the borrower first obtained a pro forma analysis of the repayment of the loan from a certified public accountant licensed in Rhode Island.
Rhode Island’s usury laws are one reason why the state may be a better place to seek debt relief than New York, where civil usury is not available to corporations. If a contract is usurious under Rhode Island law, under 6-26-4, the contract and any security for it is void, and the borrower may sue to get back whatever it has paid the lender. Also, a violation of the usury law that is committed “willfully and knowingly” is criminal usury under 6-26-3, which is punishable by up to five years in prison.
The usury cap applies only to loans. If the MCA is in fact a purchase of receivables, the usury cap will not apply. For the factors that a court will look at to determine whether an MCA is a disguised loan, see our page on 5 Signs Your MCA is a Disguised Loan. For a more general discussion, see Can a Merchant Cash Advance be Usurious? Note that 6-26-2 is “subject to the provisions of title 19,” so an entity licensed to make loans in Rhode Island may have different usury caps. Finally, most MCA contracts state that they are governed by New York law, and how a Rhode Island court would treat that clause is unclear.
Is a guarantor’s house in Rhode Island protected from an MCA funder?
Usually, yes, at least for the first $500,000. Under Rhode Island General Laws 9-26-4.1, an owner automatically acquires an estate of homestead in the principal residence that the owner occupies or intends to occupy as a home. The estate is created by operation of law, so, unlike in Massachusetts, a Rhode Island homeowner does not need to file a declaration of homestead to get the exemption.
However, there are exceptions. The homestead does not apply to any debt contracted before the homestead was acquired. Also, the homestead does not apply to a debt owing to “a federally insured deposit-taking institution or a person regulated or licensed under title 19.” So, a guarantee to an SBA or bank lender may not be protected by the homestead, but a guarantee to an MCA funder not licensed under Rhode Island law should be, so long as the guarantee was signed after the homeowner bought the house.
What property in Rhode Island is exempt from an MCA funder?
Rhode Island’s exemptions for personal property are not very generous. Under Rhode Island General Laws 9-26-4 (as amended effective June 10, 2025), the following property is exempt:
| Asset | Protected amount under 9-26-4 |
|---|
| Bank deposits | $500 |
| Motor vehicles (all together) | $12,000 |
| Household furniture, clothing and family stores | $9,600 |
| Tools of the trade | $2,000 |
| IRAs, Roth IRAs and ERISA plans | Exempt |
| Wages of spouse and minor children | Exempt |
Since Rhode Island only exempts $500 of bank deposits, it is important to settle your debt before a judgment is entered against you personally.
How do Rhode Island courts handle MCA collection suits?
Most funders sue in New York under a forum selection clause and enforce the judgment in Rhode Island under the Uniform Enforcement of Foreign Judgments Act. After the judgment is filed in Superior Court or District Court, the clerk is required to mail notice to you, and the judgment cannot be executed until 20 days after it is filed, a window to negotiate. The judgment is subject to the same defenses as any Rhode Island judgment, and you can get a stay of execution by posting security.
For funders that file in Rhode Island, R.I. Gen. Laws 10-5-2 requires the funder to file a motion for prejudgment attachment and give you 5 days notice and a hearing before getting attachment. The Superior Court has a Business Calendar set up under Administrative Order 2011-10, which excludes “simple collection matters,” but MCA cases with usury defenses, UCC receivables notice issues and counterclaims might be eligible for assignment to the Business Calendar if a party requests it and a Business Calendar justice assents.
How should you vet business debt settlement companies in Rhode Island?
Do they analyze your contract with the funder to determine if the advance has loan features and is subject to R.I. Gen. Laws 6-26-2? Do they have a lawyer to go to court to argue usury if the funder will not negotiate? Do they ask you when you signed the guarantee, whether you own a home, and whether you have debt with banks and licensed lenders that the homestead would not stop?
Is the company licensed? Rhode Island only has the Uniform Debt-Management Services Act for companies negotiating between an individual and that individual’s creditors. As of September 2026 there is no commercial financing disclosure law in title 19 of the Rhode Island General Laws. See what business debt settlement costs for what to ask about fees.
Frequently Asked Questions
Does Rhode Island's usury cap protect an LLC or corporation?
The statute does not exclude them and applies to all lenders under R.I. Gen. Laws 6-26-2. The only business exception, 6-26-2(e), covers commercial loans over $1,000,000 backed by a Rhode Island CPA’s pro forma analysis. The cap applies only if a court treats your advance as a loan.
Can a funder freeze my Rhode Island assets before it wins the case?
No. The funder needs to file a motion and give you 5 days notice of a hearing under R.I. Gen. Laws 10-5-2.
How long does a funder have to sue me in Rhode Island?
10 years under R.I. Gen. Laws 9-1-13(a) for civil actions.
Does a debt settlement company need a Rhode Island license to handle my business debt?
It is unclear. The Rhode Island Uniform Debt-Management Services Act, R.I. Gen. Laws ch. 19-14.8, only applies to services provided between an individual and the individual's creditors. There is no exclusion for business debt, but it is unclear whether the state applies it to settling personal guarantees on business debt.