No, but they can try to do it indirectly by instructing your processor to split your account, debiting your account, sending notices to your customers, repossessing equipment, or asking a Court to freeze your accounts or appoint a Receiver.
Can an MCA shut down my business directly?
No. Only the government can order a business closed and padlock its doors. No statute gives an MCA funder that right, so it has to rely on the remedies in its contract, its rights under Article 9 of the Uniform Commercial Code as a buyer or secured party, or what a Court gives it after a lawsuit.
One MCA form filed with the SEC says that if you default, they may:
- declare the full uncollected amount and fees immediately due;
- enforce the Personal Guaranty and the Security Interest;
- sue or arbitrate;
- debit your accounts; and
- notify your Processor or any of your customers to pay them.
Which Things Can The MCA Company Do Without Going To Court First?
| Can The MCA Company Do This? | Do They Need To Go To Court First? | What it hits |
|---|
| Instruct your processor to split or redirect your account. | No | Card sales |
| Debit your account pursuant to the contract. | No | Your operating account |
| Send notices to your customers instructing them to pay the MCA Company. | No | Customer invoices |
| Repossess equipment and inventory. | Only if they cannot do so without a breach of the peace | Collateral on your premises |
| Freeze your bank accounts. | Yes. They must have a Court Judgment, confessed judgment, or attachment order. | Deposit accounts |
| Ask the Court for a Receiver to take your property. | Yes | Property in the receivership |
Can a funder take money from my card processor before it reaches my bank?
Yes. Most likely, they are already taking a portion of your processor sales, since many MCAs are paid via a split or a lockbox arrangement at your processor. If you are a restaurant with $60,000 in monthly card sales on a 15% split, the MCA funder is already taking $9,000 before those sales hit your account. If they tell the processor to take 100% of your sales, your processor deposits could go to $0.00. This is allowed by the Uniform Commercial Code in Section 9-607(a), which lets a secured party, "in any event after default," "notify an account debtor or other person obligated on collateral to make payment" to it.
And, the MCA funder likely has the right to prevent you from changing processors or bank accounts, adding new terminals, or doing a bunch of other stuff without their written consent. See our article on whether changing bank accounts is a breach of your contract. Texas passed a law in 2025 restricting automatic debits of your deposit accounts (Tex. Fin. Code 398.056), but it does not expressly prohibit the split pay arrangement at your processor, so expect Texas MCA companies to use that route instead.
Can The MCA Company Take Your Equipment Or Inventory?
Maybe. If the contract gives them a security interest in your equipment or inventory, they may be able to repossess it under UCC 9-609. This gives them a limited ability to "shut you down" because the UCC allows them, "without removal," to "render equipment unusable and dispose of collateral on a debtor's premises" as long as they do it pursuant to judicial process or without a breach of the peace. So, if you object or they would have to enter your premises, they will likely have to go to Court. Each state handles the "breach of the peace" issue differently.
Before selling what it takes, the funder has to act "commercially reasonable" (UCC 9-610) and give notice to you and any guarantor (UCC 9-611). In a business transaction, notice sent 10 days before the sale is reasonable, see UCC 9-612, unless the property taken is perishable. None of this reaches equipment you lease, which belongs to the lessor, not you.
Can the funder freeze my bank account or contact my customers?
The funder cannot freeze your bank account without first obtaining a judgment, a confessed judgment or a prejudgment attachment order. In New York, a post-judgment restraint on your account cannot exceed twice the amount owed. See our page on whether an MCA funder can freeze your bank account. The funder can, however, send letters to your customers under UCC 9-406 without going to court, which mainly impacts businesses that bill other businesses. See our page on MCA funders contacting your customers.
Can a court put someone in charge of my business?
Only a Court can appoint a Receiver of your business and even then, only in limited circumstances. In New York, after judgment, a creditor can ask the Court to appoint a Receiver who can "administer, collect, improve, lease, repair or sell any real or personal property in which the judgment debtor has an interest." See CPLR 5228. The Court allows them commissions of up to 5%. Before judgment, a temporary receiver is limited to property in the lawsuit where there is danger it will be "removed from the state, or lost, materially injured or destroyed." See CPLR 6401.
Does closing the business make the MCA debt go away?
Usually, closing your business will only make matters worse, because it may be considered a default under your agreement. In People v Richmond Capital Group (1st Dept, February 19, 2026), the Court described MCA contracts under which, if the merchant would "interrupt, suspend, dissolve or terminate" its business, "the full uncollected amount became due and respondents were empowered to enforce the personal guarantees." The funder generally wants you in business and paying; if you close, they are more likely to come after you personally.
Frequently Asked Questions
Can My Processor Freeze My Account Because The MCA Funder Sent Them A Letter?
Some processors have reportedly placed holds on merchants' accounts, delayed deposits or suspended processing, but they do so at their own risk and subject to their merchant agreement with you.
If I File For Bankruptcy Can They Still Do These Things?
Filing for bankruptcy triggers the "automatic stay" under 11 USC 362(a), which stays, among other things, lawsuits, efforts to enforce a judgment, lien enforcement and other acts to collect the debt against property of the estate. Whether the "stay" applies to "receivables" that the funder purports to have "purchased" is up for debate.
Are These Things Different In My State?
Yes. Confessions of judgment are void in Texas sales-based financing as of September 1, 2025, and not permitted in Virginia sales-based financing; California courts cannot enforce them as of January 1, 2023; in New York, since August 30, 2019, the defendant must be in-state; however, in Pennsylvania, a confessed judgment is permitted in a commercial matter.