Who Owns Your MCA? 5 Checks When Several Companies Contact You

There’s a good chance the company that sold you your merchant cash advance (MCA) is not the company that owns it. The company that owns it may not be the company you thought you were dealing with from the very beginning. This can be extremely confusing and frustrating. The “owner” of your merchant cash advance is whoever holds the rights under the agreement today. Bank statements, the agreement itself, or a demand letter might all show a different name as the owner of the advance. Ultimately you want to find some piece of hard evidence that ties them to the agreement. Five ways of making sure:

• check the contract;
• a notice of assignment;
• are they actually collecting?;
• the UCC record; and
• what the broker claims is their role in all this.

This happens because Merchant Cash Advance companies may sell small blocks of advances to a few investors at a time. These are called syndicated transactions. One firm could just decide to sell several agreements to a third company for whatever reason. The owner of the agreement can also decide to use an agent to monitor your payments. In a merchant cash advance, the broker or ISO sells and is usually paid by the funding company. The funder is named as purchaser of the receivables. Sometimes a company acts as both ISO and as funding company, so a “direct lender” claim really doesn’t resolve the question.

Start with what you got in writing. Look at the signature line and find who’s on it. Is there a section that describes your funder selling the rights under the agreement? What the agreement is not going to tell you though is what party you’re actually going to be dealing with, or who owns the agreement now. Always compare this entity with who’s actually collecting payments.

Notice from the New Owner

If ownership rights to your MCA change hands, you can generally keep paying the original recipient until someone tells you to pay the new one. Once that notice arrives, though, a payment to the original party no longer counts as payment on the MCA. A different name might demand payment. Ask them to produce a document reasonably indicating a grant of those collection rights. If no such document is available within a reasonable time, paying the original creditor still discharges your obligation.

Notice from the new owner has no effect if it does not “reasonably identify” the rights assigned. A demand for only a fraction of the amount due lets you treat it as no notice at all.

The Right to Collect Payments

Ownership and the privilege of collecting payments are two separate and distinct concepts. Accepting payments on another entity’s behalf is not the same as owning that right. The new owner might not be the same company collecting payments at all. Make sure you keep funding wires and ACH payment descriptors. If your bank or credit card company debits a payment, the name you see may indicate a processor or servicer and not the actual merchant cash advance owner. Your sales contact person may know nothing of who owns the contract or the details of its repayment. Ask who has the authority to agree to payment change, contract reconciliation, or settlement. Insist on an email, a signed letter, a detailed text message, or some other evidence.

Don’t skip the UCC records. Check assignments and amendments as well as the original filing. See if you can find an assignment specifically to the entity you’re dealing with. But before you count that as proof, check the funding agreement too. A UCC filing may also name a representative. This is not always reliable in telling you who owns your merchant cash advance agreement. Generally, a UCC filing is valid for 5 years unless continued.

Your first contact in the process might be nothing more than a sales or origination representative. These folks may not have the answers you’re looking for. A broker or ISO usually never signs as a party, doesn’t fund the deal, and has no right to direct collection activity. A broker’s arranging a deal does not mean they can reduce your payments, stop debits, release the UCC, or settle the debt. Don’t automatically take their involvement as proof that they are owners of your MCA. And their idea of a solution may just be a pitch for a fresh MCA. Save every email or text the broker gave you about the advance. They show what the deal looked like to you. Note who said what and when. A broker’s statements can’t automatically change a funder’s rights. Those statements could be relevant evidence anyway.

Brokers selling merchant cash advances find people in need through marketing lists compiled through various sources, such as purchased leads, past applications, broker networks, and public UCC records. A UCC filing doesn’t necessarily mean you’re in the market for a merchant cash advance. Another advance can make your existing MCA harder to resolve. While the federal Fair Debt Collection Practices Act tends to exclude business collection efforts, deceptive language targeted at you can violate the Federal Trade Commission Telemarketing Sales Rule, which since March 2024 covers business-to-business calls.

A Paper Trail

Carefully compare the name of the owner, the name on your contract, the entity you paid, and the name that now demands payment. Look for a paper trail. Always get proof, in writing, that an entity is the current owner of your merchant cash advance agreement.

Include every one of your MCAs in the search, not only the newest one. Note the original funder, current claimant, amount paid out, and balance allegedly due. If you want to confirm ownership or arrange a payment change or settlement, get written terms from the current rights holder or authorized representative, not just the company that sold you the contract. Talking with a broker does not change your contract or suspend collection activity. Treat any legal action as an emergency, with the relevant deadlines carefully observed.