Dangers of Cash Advance Loans

Cash Advance Dangers

October 2018

A merchant cash advance was originally structured as a lump-sum payment to a business in exchange for an agreed-upon percentage of future credit card and / or debit card sales. These “merchant cash advance companies” are not loans-rather a sale of a portion of future credit and/or debit card sales. Therefore, merchant cash advance companies claim that they are not bound by state usury laws that limit lenders from charting high-interest rates. This technically allows them to operate in a largely unregulated market and charge much higher interest rates than banks.

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