Can a Merchant Cash Advance Company Sue You?
Yes. A merchant cash advance company can sue a business, and in many cases, it may also sue the business owner personally if the owner signed a personal guarantee.
Merchant cash advance lawsuits are common when an MCA company claims the business defaulted under the agreement. The funder may allege that the business missed payments, blocked ACH withdrawals, changed bank accounts, took additional financing, failed to provide records, diverted receivables, or breached other contract terms.
But being sued does not mean the MCA company automatically wins. Florida businesses may have defenses based on the contract language, reconciliation rights, payment history, claimed balance, UCC filings, collection conduct, service issues, personal guarantee language, and whether the funder complied with its own obligations.
If your business received a summons, complaint, default notice, or demand letter from an MCA company, the most important step is to act quickly and avoid making panic decisions.
Learn more about Lomba, P.A.’s Merchant Cash Advance Litigation and Defense.
Table of Contents
Can a merchant cash advance company sue you?
Why do MCA companies file lawsuits?
Who can be sued in an MCA case?
Common claims in merchant cash advance lawsuits
What happens after an MCA lawsuit is filed?
Can an MCA company sue you personally?
Can an MCA company freeze your bank account after suing?
Possible defenses to an MCA lawsuit
What to do if you are sued by an MCA company
How an MCA defense attorney can help
FAQs
Conclusion
Can a Merchant Cash Advance Company Sue You?
A merchant cash advance company can sue if it believes the business breached the MCA agreement. These lawsuits are often filed as breach of contract cases, although the exact claims depend on the contract, parties, forum, and facts.
An MCA company may sue to recover:
The remaining purchased amount
Alleged unpaid remittances
Default fees
Attorney’s fees
Collection costs
Contractual charges
Amounts allegedly owed under a personal guarantee
Injunctive or equitable relief
Enforcement of settlement terms
Many business owners are surprised by how quickly an MCA dispute can become litigation. A missed ACH payment, blocked debit, changed bank account, or disputed default can trigger aggressive collection activity and a lawsuit.
For a related guide, see What Happens If You Default on a Merchant Cash Advance?
Why Do MCA Companies File Lawsuits?
MCA companies usually file lawsuits after claiming that the business defaulted.
Common reasons include:
Missed Daily or Weekly Payments
Most MCA agreements require daily or weekly payments through ACH withdrawals or revenue-based remittances. If the funder cannot collect, it may claim default.
Blocked ACH Withdrawals
Many MCA agreements treat blocked ACH debits, revoked authorization, or insufficient funds as default events.
Changed Bank Accounts
If the business changes bank accounts without following the agreement, the MCA company may claim the business interfered with collection rights.
Additional Financing
Some MCA contracts restrict additional financing or require notice before the business takes another advance. Stacking multiple MCAs can trigger disputes.
Failure to Provide Records
MCA agreements often require the business to provide bank statements, merchant processing records, or other financial information.
Alleged Diversion of Receivables
Because MCA companies often claim they purchased future receivables, they may allege that the business diverted revenue away from the account used for collections.
Business Closure or Sale
If the business closes, sells assets, or changes ownership, the funder may claim default and pursue litigation.
Who Can Be Sued in an MCA Lawsuit?
An MCA lawsuit may name several defendants.
The Business
The company that signed the MCA agreement is usually the primary defendant.
The Business Owner
If the owner signed a personal guarantee, the MCA company may sue the owner individually.
Guarantors
Any person who guaranteed the agreement may be named in the lawsuit.
Related Business Entities
In some cases, the funder may sue affiliated entities if it believes they received funds, share ownership, or are involved in the alleged default.
Successor Businesses
If the funder believes the business changed names, transferred assets, or continued operations through another entity, it may attempt to bring claims against the successor company.
This is why business owners should be careful when restructuring, closing accounts, changing entities, selling assets, or negotiating informally after default. The legal and business consequences can be significant.
Common Claims in Merchant Cash Advance Lawsuits
MCA lawsuits often include several types of claims.
Breach of Contract
The MCA company claims the business violated the agreement by failing to make payments, blocking withdrawals, changing accounts, taking additional financing, or breaching another contract term.
Breach of Personal Guarantee
If the owner signed a guarantee, the funder may claim the owner is personally responsible for the business’s alleged default.
Account Stated
The MCA company may argue that the business accepted or failed to dispute a balance.
Unjust Enrichment
In some cases, the funder may argue that the business received funding and failed to provide the agreed repayment or receivables.
Injunctive Relief
The MCA company may ask the court to prevent the business from moving receivables, changing accounts, transferring assets, or interfering with claimed collection rights.
Attorney’s Fees and Costs
Most MCA agreements include attorney fee provisions. This can significantly increase the amount demanded.
What Happens After an MCA Lawsuit Is Filed?
After an MCA lawsuit is filed, the business or owner may be served with a summons and complaint. In Florida civil cases, defendants generally face short response deadlines, and missing the deadline can lead to default.
A default judgment can create serious problems. Once a judgment is entered, the creditor may pursue collection remedies such as garnishment, post-judgment discovery, asset collection, or other enforcement tools.
After a lawsuit is filed, the business should immediately:
Save the summons and complaint.
Note the date and method of service.
Gather the MCA agreement.
Gather any personal guarantee.
Download bank statements.
Preserve ACH payment records.
Save all default notices and demand letters.
Find any reconciliation requests.
Review UCC filings.
Contact an MCA defense attorney.
The earlier legal counsel becomes involved, the more options may be available.
Can an MCA Company Sue You Personally?
Yes, if you signed a personal guarantee.
Many MCA agreements require the business owner to sign twice: once as an authorized representative of the company and once personally as a guarantor. If the funder claims default, it may sue both the business and the owner individually.
A personal guarantee can create exposure beyond the business itself. The funder may seek to hold the owner responsible for the claimed balance, attorney’s fees, costs, and other amounts.
However, a personal guarantee does not mean the funder automatically wins. Counsel should review:
Whether the guarantee was properly signed
What obligations were guaranteed
Whether the default was valid
Whether the funder complied with the agreement
Whether the claimed balance is accurate
Whether the guarantee has limitations
Whether the owner has separate defenses
Business owners should not ignore lawsuits naming them personally. The individual exposure can be just as important as the business claim.
Is a Merchant Cash Advance Lawsuit the Same as a Loan Lawsuit?
Not exactly.
Many MCA companies argue that their agreements are not loans. Instead, they claim the agreement is a purchase of future receivables. Florida’s Commercial Financing Disclosure Law recognizes accounts receivable purchase transactions as a type of commercial financing, subject to statutory scope and exclusions.
That distinction matters because the legal analysis may differ from a traditional loan case.
In an MCA lawsuit, important questions may include:
Did the funder purchase future receivables?
Were payments tied to revenue?
Was reconciliation available?
Did the funder assume any risk if receivables declined?
Was repayment fixed in practice?
Did the contract operate more like a loan?
Did the funder comply with its own agreement?
Was the claimed default valid?
For more on this distinction, see MCA Loan vs. Traditional Business Loan
Can an MCA Company Freeze Your Bank Account After Suing?
Filing a lawsuit does not automatically freeze a business bank account. However, an MCA company may seek legal remedies depending on the case, the agreement, and whether a judgment has been entered.
A business owner should distinguish between:
| Issue | What It Means |
|---|---|
| ACH debit | The funder withdraws payments under the MCA agreement |
| Lawsuit | The funder asks the court to award relief |
| Judgment | The court determines liability or enters an enforceable order |
| Garnishment | A court process used to reach funds held by a third party |
| UCC enforcement | A secured party claims rights in collateral or proceeds |
After judgment, a creditor may pursue garnishment under Florida law. Before judgment, special procedures may apply, and the funder does not simply gain unlimited access to business accounts because a complaint was filed.
If your bank account is frozen, ask the bank for copies of any writ, order, notice, or legal document that caused the restriction.
See Can MCA Lenders Freeze My Business Bank Account?
Can an MCA Company File a UCC Lien?
Yes. Many MCA agreements authorize the funder to file a UCC financing statement against the business.
A UCC filing may claim an interest in:
Receivables
Accounts
Payment intangibles
Proceeds
Deposit accounts
Inventory
Equipment
General business assets
A UCC filing can interfere with new financing, refinancing, business sales, merchant processing, and settlement negotiations.
But a UCC filing is not the same as a judgment. It is also not always the same as a bank freeze. The underlying agreement, collateral description, default status, and filing accuracy all matter.
Possible Defenses to an MCA Lawsuit
Every MCA lawsuit is different, but several defense strategies may be available.
1. The Funder Miscalculated the Balance
The amount demanded may include unsupported fees, duplicate charges, inflated default costs, attorney’s fees, or an incorrect payment history.
2. The Business Requested Reconciliation
If the MCA agreement allowed reconciliation and the business requested a payment adjustment, the funder’s response may be important. A refusal to honor reconciliation rights can become a key issue.
See Merchant Cash Advance Reconciliation Rights Explained.
3. The Alleged Default Is Disputed
The funder must show that a default occurred under the contract. The business may dispute whether the alleged default happened or whether the funder complied with the agreement.
4. The MCA Did Not Operate Like a True Receivables Purchase
If payments were fixed, absolute, and not meaningfully tied to receivables, the business may have arguments regarding the true nature of the transaction.
5. The Funder Lacks Standing
The plaintiff must have the legal right to enforce the agreement. If the MCA was assigned or transferred, the plaintiff may need to prove its authority.
6. The UCC Filing Is Overbroad or Inaccurate
If the UCC filing does not match the agreement, identifies the wrong debtor, or claims excessive collateral, it may create dispute issues.
7. The Personal Guarantee Is Defective or Limited
If the owner is sued personally, the guarantee must be reviewed carefully.
8. The Funder Breached First
If the funder failed to honor reconciliation, improperly withdrew funds, misapplied payments, or violated the agreement, that conduct may affect the case.
What Should You Do If a Merchant Cash Advance Company Sues You?
If an MCA company sues your business, take the lawsuit seriously.
Step 1: Do Not Ignore the Complaint
Ignoring the lawsuit can lead to default judgment.
Step 2: Do Not Admit Liability
Avoid sending emails or text messages admitting that the claimed amount is correct.
Step 3: Gather Documents
Collect the MCA agreement, personal guarantee, payment records, bank statements, merchant processing reports, UCC filings, default notices, and settlement communications.
Step 4: Check for Reconciliation Requests
If you requested payment adjustment, gather proof of the request and the funder’s response.
Step 5: Review the Claimed Balance
Compare the amount funded, amount paid, fees deducted, and current demand.
Step 6: Speak With an MCA Defense Attorney
An attorney can evaluate defenses, file a response, negotiate settlement, and help protect the business from aggressive collection activity.
Can You Settle an MCA Lawsuit?
Yes. Many merchant cash advance lawsuits settle before trial.
Possible settlement terms may include:
Reduced payoff
Modified payment schedule
Dismissal of lawsuit
Release of personal guarantee claims
UCC termination or amendment
No further processor contact
No further customer contact
Mutual release
Cure period for missed settlement payments
The key is to avoid signing a settlement that the business cannot perform. A settlement that creates another impossible payment obligation may simply lead to a second default.
See Debt Settlement Litigation for Businesses
How an MCA Defense Attorney Can Help
An MCA defense attorney can help a Florida business evaluate the lawsuit and develop a strategy.
Legal representation may include:
Reviewing the MCA agreement
Reviewing personal guarantee exposure
Responding to the complaint
Evaluating service, venue, and jurisdiction
Challenging the claimed balance
Raising contract defenses
Reviewing reconciliation rights
Analyzing UCC filings
Negotiating settlement
Defending against judgment
Addressing bank account or garnishment threats
Protecting business operations
MCA litigation is not just about the lawsuit. It often affects cash flow, bank relationships, financing, personal liability, vendor obligations, and the future of the company.
FAQs
Can a merchant cash advance company sue you?
Yes. A merchant cash advance company can sue a business if it claims the business defaulted under the MCA agreement. If the owner signed a personal guarantee, the funder may also sue the owner individually.
Why would an MCA company sue my business?
An MCA company may sue if it claims missed payments, blocked ACH withdrawals, changed bank accounts, additional financing, diverted receivables, business closure, or another alleged breach of the agreement.
Can an MCA company sue me personally?
Yes, if you signed a personal guarantee. Many MCA agreements include personal guarantee language that allows the funder to pursue the business owner individually after alleged default.
What happens if I ignore an MCA lawsuit?
Ignoring an MCA lawsuit can lead to default judgment. Once judgment is entered, the creditor may pursue collection remedies, including garnishment and other enforcement tools.
Can I defend a merchant cash advance lawsuit?
Yes. Potential defenses may involve reconciliation rights, disputed default, inaccurate balance calculations, UCC issues, personal guarantee defenses, funder misconduct, or whether the MCA operated as a true receivables purchase.
Can an MCA lawsuit be settled?
Yes. Many MCA lawsuits settle through reduced payoff agreements, structured payments, lawsuit dismissal, UCC release, and negotiated resolution terms.
Can an MCA company freeze my bank account after suing?
A lawsuit alone does not automatically freeze a bank account. Bank account restrictions may involve court process, judgment, garnishment, UCC rights, or other legal and contractual issues.
What should I do if I am served with an MCA lawsuit?
Save the lawsuit papers, note the service date, gather your agreement and payment records, avoid admissions, and contact an MCA defense attorney quickly.
Conclusion
A merchant cash advance company can sue your business, and it may sue you personally if you signed a guarantee. But a lawsuit is not the end of the story. MCA cases often involve disputed contract terms, reconciliation rights, UCC filings, personal guarantee issues, inaccurate balances, and aggressive collection conduct.
If your Florida business has been sued by an MCA company, time matters. Responding quickly can help preserve defenses, improve settlement leverage, and reduce the risk of default judgment.
Lomba, P.A. represents businesses in merchant cash advance lawsuits, MCA defense, debt settlement litigation, UCC disputes, and commercial debt matters.
Contact Lomba, P.A. to speak with a Florida MCA defense attorney about your options.