New York is the MCA industry’s home court, most contracts choose NY law and NY venue no matter where the business sits. For a New York business, that cuts both ways.
The merchant cash advance industry is concentrated in and around New York, and its contracts overwhelmingly select New York law and New York venue. For a New York business, this means the lawsuit happens in your own state's courts, faster for the funder, but also in a jurisdiction whose judges have seen thousands of these agreements and whose case law on what makes an MCA a true receivables purchase (rather than a disguised usurious loan) is the most developed in the country. Recharacterization arguments, that the "purchase" was actually a loan at criminally usurious rates, are litigated in New York more than anywhere else.
For years, the MCA industry's favorite weapon was the confession of judgment: a document signed at funding that let the funder enter judgment instantly, without a lawsuit. In August 2019, New York amended its law to bar entry of confessions of judgment against non-New York debtors, but note the wording: New York businesses can still be subject to COJs filed in New York. If you signed one, a funder can move from default to judgment with startling speed. Knowing whether a COJ exists in your file is one of the first things to establish in any review.
New York's CFDL, effective August 2023, requires standardized cost disclosures on most commercial financings under $2.5 million, squarely covering typical MCA transactions. Separately, the New York Attorney General has pursued enforcement actions against predatory MCA funders, in some cases resulting in cancelled debts and restitution. Neither development erases an existing contract, but both shift the negotiating climate: funders with exposure prefer settlement to scrutiny.
Determine immediately whether any of your agreements include a confession of judgment, and search for UCC filings against your business with the NY Department of State. If a COJ exists, treat resolution as urgent, the distance between default and enforcement is far shorter for you than for an out-of-state borrower. Total your daily pulls, compare against real margin, and get the review before a funder moves first.
Against New York debtors, yes. The August 2019 amendment barred COJs against non-New York residents, but a New York business that signed one can still face near-instant judgment after default. Establishing whether a COJ exists in your agreements is an urgent first step.
The CFDL, effective August 2023, requires standardized cost disclosures on most commercial financings under $2.5 million, including typical merchant cash advances. Non-compliant recent agreements can add settlement leverage.
The industry is concentrated in New York and its courts process MCA litigation at scale. For funders it means speed and familiarity; for borrowers it means New York’s well-developed case law on loan recharacterization and usury applies, which experienced negotiators use.
Yes. The New York Attorney General has brought enforcement actions against predatory MCA funders, in some cases cancelling debts and obtaining restitution. Regulatory pressure has made many funders more willing to settle quietly.
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