What Is a Merchant Cash Advance and Why Is It So Risky?

When cash flow is tight, Merchant Cash Advances (MCAs) may appear to offer a quick solution. But these “loans” often come with hidden dangers that can put your entire business—and personal assets—at risk.

At Keck Legal, we regularly help small business owners who’ve unknowingly fallen into the MCA trap. These agreements are often disguised as accounts receivable factoring or working capital loans, but in reality, they function like payday loans with effective interest rates as high as 200–300%.

Even more alarming, MCA lenders usually set up daily or weekly automatic withdrawals from your business bank account. This means your cash flow disappears fast—leaving you unable to pay payroll, suppliers, or even hire legal help when things go south.

Many MCA agreements include personal guarantees, putting your home or other personal property at risk. And once your funds run dry, these lenders often use confessions of judgment to obtain fast legal claims—usually filed in states like New York or Pennsylvania—without ever going to court.

What Should You Do If You’re Considering or Already Trapped in an MCA?

Don’t wait. The earlier you speak with an attorney, the more options you have. We specialize in Chapter 11 reorganizations and can help you fight back against MCA lenders using proven legal strategies.

Contact Keck Legal today to schedule a consultation and protect your business from predatory lending.