New York MCA Judgment Interest: 5 Lessons From a $60,000 Illustration

Accumulating Interest at a Rate of 9% per Year

According to New York law, your Merchant Cash Advance judgment in the amount of $60,000 (excluding costs and fees, which will be added to your judgment) is likely accumulating interest at a rate of 9% per year. Your judgment began to accrue interest at 9% per year the minute your adversary got the court’s judgment against you.

Say, for example, that you first fell behind on payments for your Merchant Cash Advance, resulting in a default judgment against you for the full remaining amount of $60,000 plus fees. $60,000 x .09 = $5400 x 2 years = $10800 plus the $60,000 judgment = $70800. So within two years, the Judgment would have risen to $70,800.

The first lesson is that business debts like the one from your Merchant Cash Advance are stuck at the much higher 9% rate. The lower 2% figure only applies to debts owed personally by an individual for personal, family or household purposes; it never applies to debt by a business or to commercial purposes.

Next, interest doesn’t wait for a judgment. Pre-judgment interest runs generally from the date of default, and interest then runs on that total until judgment. In a contract case the court must award the interest. However, damages that came later will earn interest only from when they were incurred. As an example, consider the case of a judge in Rockland County letting an MCA funder take judgment for $27,740, plus 9% pre-judgment interest from September 27, 2023, plus post-judgment interest and costs.

Third, judgment lasts 20 years before being presumed paid in New York; but one partial payment or signed acknowledgment restarts that. A lien on the debtor’s real estate in the county runs for 10 years. At 9% per year, each year sees another $5400 added to your judgment. So within seven years, the Judgment would have risen to $97,800.

Fight That Number

Lesson four is that the interest starts at whatever number the judge puts on the judgment, so it pays to fight that number in any case. In that Rockland case the judge struck that MCA’s default fee as an unenforceable penalty, and found the 30% attorney fee clause to be a maximum, requiring proof for its billing. Loan funders often ask the court for a quick, abbreviated judgment, hoping to avoid going through discovery (finding out about the facts of a case). For example, one MCA sued only five days after default. The court found no breach. The account history showed only funds not received, and the funder never showed the business was generating receivables.

In 2024, a judge denied an MCA funder’s summary judgment motion because its affidavit did not properly authenticate the supposed agreement as a business record. Two other recent MCA decisions deserve your attention. In one, the MCA funder’s summary judgment application was denied, even though the owner didn’t file a single pleading or document in opposition. The court found it necessary to analyze both the funders’ affidavits and the loan documents themselves, and ruled that the funder still needed to prove its case. In another unopposed MCA case, where the defendant owner never fought, the court found the funder had failed to prove a breach by the business, so the personal guarantor couldn’t be held to owe any money, either.

Usury Defense

Fifth, whether there will be a judgment at all depends on how you fight. Some business borrowers, at least, have a powerful legal defense based on the law of usury (charging excessive interest). A corporation, however, must rely only on criminal usury, knowingly collecting an interest rate over 25% per year. In 2021, the New York Court of Appeals held such a loan to be void. Usury law punishes loan sharks by making their loan void and uncollectable. But that usury defense doesn’t apply if the court views the MCA as something other than a loan. Courts typically pay attention to reconciliation, a fixed term, and recourse if the merchant goes bankrupt.

You also want to look at how the judgment was obtained. In New York, a confession of judgment can be filed only in your county, and only within three years of signing. The Yellowstone MCA settlement canceled a stunning $534,552,724 of debt, and vacated many judgments. A 2026 suit by the AG alleged that no business defendant appeared in arbitration in 97% of Rapid Ruling’s roughly 3,000 arbitrations, which were later turned into court judgments.

So the bottom line is that, because interest begins before and outlives a judgment, taking action quickly works to your advantage. Many people don’t because they can’t afford lawyers, but the cases mentioned here show you may buy yourself time and get past summary judgment. That time can also be used to talk settlement with the funder.