Unique Funding Solutions Settlement: 6 Factors That Determine What They Accept

A Settlement Number Is an Estimate of Two Things

Every settlement offer a funder accepts is a judgment about two quantities: what it can collect from you if it fights, and what fighting will cost. Nothing else is in the equation. Sympathy is not in it, the story of how your best customer went under is not in it, and the fairness of a factor rate you agreed to eighteen months ago is not in it either. Once you understand that, the negotiation stops being a plea and becomes a set of adjustments to those two numbers, which is something a business owner can actually work on.

There is one reported decision involving this funder, GMI Group, Inc. v. Unique Funding Solutions, LLC, 606 B.R. 467 (Bankr. N.D. Ga. 2019), in which a bankruptcy court held the agreement in front of it was a loan rather than a receivables purchase, and criminally usurious under New York law. That decision is useful as a map of what a court found persuasive. It is not a coupon. Your agreement may be a later form with different language, and the six factors below are the ones that decide where your particular file lands, in roughly the order they get argued.

1. Whether Your Reconciliation Right Can Actually Function

The reconciliation clause is where most of the leverage in an advance file lives, and the question is never whether the clause exists. It is whether a merchant could realistically use it. The 2019 decision is instructive precisely because the clause was in the document and the court held it illusory anyway, at 606 B.R. 487, on two grounds: the merchant could invoke it only once a month, and a separate covenant required maintaining a bank balance of twice the daily payment, which the court measured as the equivalent of 34% of daily collections. The court also noted the agreement never said when a reconciled amount would take effect.

For a funder’s counsel evaluating settlement exposure, that combination is uncomfortable, because it is not fixable by argument. A monthly window is a fact on the page. A minimum balance covenant is a fact on the page. Together they support the position that the merchant’s payments were never going to track its receipts, which is the foundation of the recharacterization argument that turns a purchase into a loan. Where those features appear in your own document, the settlement conversation starts from a different place than it does where the clause says the funder shall adjust on request and the funder can show it did.

So read the two sections together before you make any offer, and be honest about what you find. If your form gives you a genuine mandatory adjustment and you never once asked for it, the argument is weaker and pretending otherwise wastes credibility you will need later. Which drafting patterns across the market make these rights unusable in practice is catalogued on our review of the funders most aggressive on reconciliation denials.

2. What the Four Numbers in Your Own File Imply

Recharacterization arguments live or die on arithmetic, and the arithmetic is short. Write down the amount actually funded, the total purchased amount, the scheduled remittance, and the real number of business days the collection took or will take. In the 2019 case those figures were $75,000 funded against a purchased amount of $111,750, collected at $1,117 a day, and it is that shape, rather than the label on the cover page, that drives an effective annualized rate far above any usury threshold in the country.

The reason this factor moves a settlement number is that it converts a legal theory into a figure the other side has to price. New York treats a criminally usurious loan as void in its entirety, and its criminal usury rate is 25% a year under N.Y. Penal Law §190.40, with a corporate borrower confined to that standard by Gen. Oblig. Law §5-521. A funder facing a plausible argument that the entire obligation is unenforceable is not evaluating whether it wins, it is evaluating a distribution of outcomes that includes zero. That is exactly the arithmetic that produces movement.

Be careful with the honest limits. New York starts from a presumption against usury, courts have gone both ways on these forms, and one bankruptcy decision from Georgia applying New York law binds no court hearing your case. The number in your file is an input to a negotiation rather than a verdict, which is why the strongest position is a written schedule of what was funded, what was taken, and when, delivered to counsel who can tell you whether it supports a demand or only a discussion.

3. Whether a Guaranty and a Confession Are Both in Play

A personal guaranty changes the collection picture more than any other single document, because it moves the target from a company with declining deposits to an individual with a home, a car and a personal account. In the 2019 decision, the court counted the guaranty among the features showing the transaction was a loan and not a purchase, alongside the confession of judgment, the default provisions and the remedies. That cuts both ways in a negotiation, which is what makes this factor interesting rather than simply bad news.

The bad news first. If the guaranty is clean and you have real personal assets, the funder’s recovery estimate goes up and its willingness to discount goes down. Now the other side. Every recourse feature in the paper, the guaranty included, is evidence against the funder’s core position that it bought receivables and assumed the risk of nonpayment. A funder that wants to collect from you personally is arguing for the very structure that supports recharacterizing the deal as a loan. Where a confession of judgment sits in the same file, C.P.L.R. §3218 limits its use in New York to the county where the defendant resided, within three years of execution of the affidavit, and bars entry after death.

What that means practically is that the guaranty question should be worked before you talk numbers, not after. The exposure analysis, the state exemptions that apply to you personally, and what a judgment against an individual can actually reach are laid out on our page on being sued personally by an MCA funder. A settlement that resolves the company and leaves the guaranty alive is not a resolution, it is a delay with paperwork.

4. Which State’s Law Would Decide the Fight

Advance agreements almost always specify New York law, and merchants tend to assume that is meaningless boilerplate. It is close to the opposite. New York is where the criminal usury standard and the reported recharacterization decisions give a merchant something to argue, which is precisely why funders point there. Whether a court actually applies the chosen law, or the law of the state where the merchant sits, has decided real cases in both directions, and it is the least predictable variable in this entire analysis.

The variation between states is dramatic and it is not intuitive. Pennsylvania’s 41 P.S. §201(b)(3) exempts business loans of any principal amount from its rate ceiling, so a Pennsylvania merchant that wins the recharacterization argument still has no rate remedy. Illinois does the same thing through 815 ILCS 205/4(1), which permits any rate on a loan to a corporation or a business borrower. Georgia went further for covered transactions consummated on or after January 1, 2024, where O.C.G.A. §10-1-393.18(c) makes a provider’s characterization of the deal as a purchase conclusive for usury purposes. In each of those states, winning the argument moves the deal into the category the statute exempts.

This is why a settlement posture built on usury alone is fragile outside a handful of jurisdictions, and why the strongest files carry a second theory: breach of the reconciliation obligation itself, a disclosure defect where a state disclosure statute applied, or a defect in how a judgment was obtained. Before you anchor a demand on recharacterization, have someone tell you what recharacterization is actually worth under the law that would govern your case.

5. Where This Funder Sits in the Lien Order

Priority among secured creditors runs first to file or perfect under U.C.C. §9-322(a)(1), and in a stacked merchant that ordering decides who is negotiating from strength. Pull your own UCC search before you make an offer. If the funder you are negotiating with filed fourth, behind two other advance companies and an equipment lender, its practical recovery on the collateral is close to theoretical, and a settlement is worth relatively more to it than to the first filer. If it filed first and the collateral has real value, its estimate of what it can collect goes up accordingly.

The same ordering shapes what any deal has to include. A settlement that does not obligate the funder to file a UCC-3 termination leaves a lien on your receivables and equipment that will block the next line of credit you apply for, and U.C.C. §9-513(c) gives a secured party 20 days after an authenticated demand to file a termination statement where there is no longer an obligation. Put the termination in the agreement as a condition of payment rather than a promise for afterward.

Stacking also constrains what any single settlement accomplishes. Resolving one of four positions while the other three keep debiting simply reallocates the same cash to the remaining funders, which is why sequencing matters more than speed. The order in which positions get restructured, and the conditions that make a multi-position workout hold together, are worked through on our page on restructuring a stacked merchant.

6. Who Holds the File and What a Fight Would Cost Them

The economics of the party across the table are not identical to the economics of the company that funded you. A file sold to a purchaser at a discount can be settled for a number the original funder would have refused, because the holder’s cost basis is lower and its business is turnover rather than principle. A file that has been referred to outside collection counsel on a contingency carries a different calculation again, since counsel gets paid on collections and a settlement today beats a summary judgment motion in nine months.

Litigation cost is the other half. Nobody publishes what it costs to defend one of these cases through summary judgment, and any firm quoting you a precise figure invented it, but the components are knowable: an answer, a venue motion where the county is wrong, document discovery over reconciliation requests and bank records, at least one deposition, and motion practice. That is a five-figure project on both sides. A funder looking at that spend against a merchant with an arguable reconciliation defense is looking at a case that has to be priced, not simply collected.

Which is why the moment of maximum leverage is usually earlier than merchants expect. Before a default judgment is entered, before a summary judgment motion is briefed, while the holder is still deciding whether this is a paper file or a real one, a documented reconciliation demand and a credible defense change the estimate. Afterward, you are negotiating against a judgment, and the discount available to a judgment creditor collecting at 9% a year is much smaller.

Why One Reported Decision Is Not a Discount

It would be easy to write a page telling you that because a bankruptcy court in Georgia held one Unique Funding Solutions agreement was a usurious loan, your balance is unenforceable and the funder knows it. That would be wrong, and worse, it would set you up to make a demand you cannot support. One decision describes the paper and the conduct in one case, decided in 2019 on a document signed before that. Funders revise forms in response to adverse rulings, sometimes within a quarter, and the version you signed may address exactly the features that court criticized.

The honest posture is more useful anyway. Take the reasoning of the decision and use it as a checklist against your own agreement, then build your position on what your document and your bank record actually show. A demand that says your reconciliation clause is limited to a monthly window, that a balance covenant made it unusable, that you asked in writing on these dates and got no response, and that here is the schedule of what was collected above the specified percentage, is a demand that survives contact with opposing counsel. A demand that says a court once ruled against this funder does not.

Who Should You Call? Our Top-Rated Business Debt Firms

One firm on this list works the entire lifecycle of a business debt file, from stopping the daily debits through attorney-led negotiation, UCC lien removal, and a signed release. The other two cover broader debt categories that often sit alongside the advances. Choose accordingly.