The Door Painted on the Wall
A merchant cash advance says it's a purchase of your future sales, not a loan, and whether that holds up depends on one clause most owners never use.
Nell and Hank · 24 min · 13 Oct 2026
Verified to the FactUnion StandardChecked 13 Oct 2026
About this episode
Ten thousand dollars lands in your account. The next morning, and every weekday after it, a fixed debit goes back out. In the first episode of Days of Cash, Nell and Hank use the New York Attorney General's own filing against Richmond Capital Group to explain what a merchant cash advance is, what a factor rate of 1.35 costs per day, and why funders say it isn't a loan. They also go through the February 2026 appeals ruling that called Richmond's deals usurious loans, and the reasons small businesses across the US are now being sued in a New York county they've never been to.
The deciding question comes down to one clause: reconciliation, the promise that payments shrink when sales shrink. We look at how courts test it, why nobody publishes how often it's honored, and how wage buyers made the same "it's a sale, not a loan" argument around 1910 before the law settled it. We finish with what we'd steal from this: plain moves for any owner who gets offered fast money. This episode is general information, not legal or financial advice. Court filings are allegations, and a filing proves nothing about any named business.
Hosted by Nell and Hank, performed by synthetic voices. Verified to the FactUnion Standard. Supported by Lynqly.
Fact sheet
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On February 19, 2026, New York's Appellate Division, First Department, unanimously affirmed Richmond Capital Group's liability under Executive Law 63(12), holding that its transactions were usurious loans and not merchant cash advances.
People v. Richmond Capital Grp. LLC, 2026 NY Slip Op 00990Richmond Capital $77M Judgment Modified — Liability Stands - Credible LawPeople of the State of New York v. Richmond Capital Group LLC, et al. - Appealmate
The First Department relied on evidence that Richmond's mandatory reconciliation provisions were never performed, that daily payments were fixed rather than estimates of receivables, and that bankruptcy or business termination triggered full repayment and enforcement of personal guarantees.
Richmond Capital $77M Judgment Modified — Liability Stands - Credible LawHow New York's Appellate Departments Examine Revenue Purchase Agreements - Trials & Appeal
The court vacated and remanded the $77,289,631 monetary award because the People had not excluded repayments of principal from damages or accounted for offsets such as prior settlements.
Richmond Capital $77M Judgment Modified — Liability Stands - Credible LawPeople of the State of New York v. Richmond Capital Group LLC, et al. - Appealmate
The First Department also held that disgorgement was not an available remedy on the facts of the Richmond case.
People v. Richmond Capital Group LLC, App. Div. 2026Richmond Capital $77M Judgment Modified — Liability Stands - Credible LawPeople v. Richmond Capital Group LLC — freecase.ai
The New York AG's verified petition against Richmond Capital describes a transaction in which Richmond loaned a merchant $10,000 and required it to pay back $19,900 in daily payments over a 10-day term.
Richmond - Petition - Rev 6.9.2020Richmond - Petition - Rev 6.9.2020Attorney General James Scores Major Victory for Small Businesses Harmed by Predatory Lende
The New York Attorney General announced the lawsuit against Richmond Capital Group in a press release dated June 10, 2020.
Attorney General James Sues Predatory Lender That Threatened Violence and Kidnapping, and Attorney General James Sues Predatory Lender That Threatened Violence and Kidnapping, and
New York's Second and Fourth Appellate Departments decide whether an MCA is really a loan using a three-factor test: whether there is a reconciliation provision, whether the agreement has a finite term, and whether there is any recourse if the merchant declares bankruptcy.
How New York's Appellate Departments Examine Revenue Purchase AgreementsHow New York's Appellate Departments Examine Revenue Purchase AgreementsWhat 7 NY Appellate Decisions Tell Us About MCA Usury Defense in 2024-2025 | DocketDrafter
Courts have treated reconciliation provisions as illusory, pointing toward a loan, when the funder has sole discretion to adjust payments or when there is no consequence for the funder ignoring them.
How New York's Appellate Departments Examine Revenue Purchase AgreementsHow New York's Appellate Departments Examine Revenue Purchase AgreementsWhat 7 NY Appellate Decisions Tell Us About MCA Usury Defense in 2024-2025 | DocketDrafter
In Pinnacle Business Funding LLC v. American Iron & Crane, the reconciliation clause required the funder to complete reconciliation within two business days of proper notice and to give written notice of its determination within one business day after that, and the court found disputed facts about whether requests were made and honored.
Questions of Fact Regarding Legitimacy of Reconciliation Provisions Preclude Summary Judgm
MCA reconciliation clauses typically require the merchant to send a written request together with financial documents, often bank statements covering the period from the agreement date to the request.
Questions of Fact Regarding Legitimacy of Reconciliation Provisions - Lundin PLLCUse Reconciliation To Reduce MCA Payments | SKA Law GroupHow to Request a Reconciliation in a Merchant Cash Advance (MCA) Agreement - Law Office of
A 1.35 factor rate means repaying 135% of the amount advanced, and the APR depends on the term and the calculation method: estimates run from about 140% to 176% over 90 days and from about 70% to more than 110% over 6 months.
Factor Rate to APR CalculatorWhat Is a Factor Rate on a Merchant Cash Advance? — Debtura IntelligenceFactor rate vs APR: converting the number your broker quoted | First American Debt Help
On September 24, 2026, the Rockland County Business Journal reported that Rockland County Supreme Court has become a hub for hundreds of collection suits filed by out-of-state MCA providers, including Funding Futures, Mantis Funding, The Merchant Marketplace, Swift Funding, Lendr Online and Funding Depot.
Rockland County Flooded With Sketchy Merchant Cash Advance LawsuitsMCA Sued Me in New York: Wrong County? What to Do - Credible LawWhy Out-of-State Merchant Cash Advance Companies Are Suing Small Businesses in Rockland Co
Under New York's CPLR 503(a), a plaintiff may designate any county when no party resides in New York, and under CPLR 509 the place of trial is the county the plaintiff designates unless changed by court order or the plaintiff's consent, which lets funders file in Rockland even when neither side has a connection to it.
MCA Sued Me in New York: Wrong County? What to Do - Credible LawNYS Open Legislation | NYSenate.govNew York Consolidated Laws, Civil Practice Law and Rules - CVP § 509. Venue in county desi
New York's 2019 ban on confessions of judgment against non-residents removed a faster collection shortcut, so funders now use standard lawsuits to get default judgments.
Why Out-of-State Merchant Cash Advance Companies Are Suing Small Businesses in Rockland CoNew York’s New Confession Of Judgment Law & The Unintended Consequences Of Its Residency RNew York Amends Confession of Judgment Statute to Prohibit Confessions Filed Against Out-o
Funders' New York default judgments are then domesticated in the merchant's home state so they can be used to seize assets there.
Why Out-of-State Merchant Cash Advance Companies Are Suing Small Businesses in Rockland Co
Reports say few Rockland MCA cases are defended because hiring New York counsel often costs more than the amount claimed, though no exact default rate has been published.
Rockland County Flooded With Sketchy Merchant Cash Advance LawsuitsMCA Sued Me in New York: Wrong County? What to Do - Credible LawSued in New York by MCA Company Out of State? What to Do | MercResolution
Defendants in the Rockland filings are small businesses in states including Arizona, Virginia, California, Florida, Texas and Ohio, and the Rockland County Business Journal cited Merchant Marketplace Holdings v. Purpose Driven Daycare LLC, a California daycare, as an example.
Rockland County Flooded With Sketchy Merchant Cash Advance LawsuitsMCA Sued Me in New York: Wrong County? What to Do - Credible LawWhy Out-of-State Merchant Cash Advance Companies Are Suing Small Businesses in Rockland Co
SCJ Commercial Financial Services v. Titis Island Cuisine was filed in Rockland County on August 14, 2026.
SCJ COMMERCIAL FINANCIAL SERVICES et al v TITIS ISLAND CUISINE et al
According to the Federal Reserve's 2023 Small Business Credit Survey, 5% of employer firms applied for a merchant cash advance in the 12 months before the survey.
2024 Report on Employer Firms: Findings from the 2023 Small Business Credit SurveyREPORT ON EMPLOYER FIRMS:REPORT ON EMPLOYER FIRMS:
Because MCAs are not classified as loans, they are exempt from Truth in Lending Act disclosures, and there is no standardized reporting of their default rates.
Federal Reserve Board PublicationMerchant Cash Advance: Legal Structure and How They Work - LegalClarityMerchant Cash Advance Regulation: What Laws Apply to MCAs?
MCA providers market the product as fast liquidity, with funding often arriving within 24 hours, and it often serves as a last resort for businesses banks won't serve.
Desperation Finance: Merchant Cash Advances in Bankruptcy and BeyondWhat you need to know before taking out a merchant cash advance - AR FundingMerchant Cash Advance vs Bank Loan: Key Differences
JPMorgan Chase Institute's 2016 report found that the median US small business holds 27 cash buffer days, restaurants hold 16, and personal-service businesses hold 21.
Cash Flows, Balances, and Buffer Days | JPMorgan Chase InstituteCash is King: Flows, Balances, and Buffer Dayshttps://gettidycents.com/data/small-business-cash-buffer-days-2015.csv
In 2025 commentary, the JPMorgan Chase Institute said small businesses typically hold enough cash to cover about two weeks of outflows if revenue stopped completely.
A decade of insights: Three essentials about small businessesSmall business in times of distress: Lessons learned from the pandemicSmall Business Financial Outcomes during the Onset of COVID-19 | JPMorganChase
Early-20th-century salary buyers purchased workers' future wages at a discount, typically 10% per pay period, and framed the deals as sales rather than loans to evade usury laws.
Section 16 of the Russell Sage Foundation's Uniform Small Loan Law classified purchases of wages of $300 or less as loans and treated the difference between the price paid and the wages assigned as interest.
Seventh draft of the Uniform Small Loan LawSMALL LOAN LEGISLATIONThe Development of Regulatory Small Loan Laws
The Uniform Small Loan Law let licensed lenders charge higher rates, often 3.5% a month, in exchange for transparency, a ban on extra fees, and state supervision.
The Development of Regulatory Small Loan LawsA Short History of Payday Lending Law | The Pew Charitable TrustsBringing “Honest Capital” to Poor Borrowers: The Passage of the Uniform Small Loan Law, 19
Courts applying small loan laws rejected wage buyers' argument that their transactions were absolute sales and upheld treating them as loans, as in the West Virginia case Cash Service Co. v. Ward (1937).
Cash Service Co. v. Ward, 118 W. Va. 703 (1937)118 W. Va. 703 (3 citations) :: Cash Service Company v. George Ward, Banking Commissioner,
