By Thomas Tramaglini, Chief Operations Officer
Keeping Them Honest.
Each Day, small business owners default on Merchant Cash Advances (MCAs) because they are unable to pay back their advances due to various reasons. In recent months, we started the Center for Merchant Cash Advance Research to begin to better understand and inform decision making by our team in their quest to support small business owners who are facing UCC liens and legal action. The question we ask is what accountability do MCA companies, their collections firms, as well as their attorneys have when dealing with small business owners? The answer is relatively little. The goal of our work is to report on the landscape of the MCA industry from a different perspective from what has been done before which has and will continue to inform our team, as well as small business owners on the trends and tactics of MCA companies, their collections firms, as well as their attorneys.
Below we share some first looks at some of the data that we have collected for years, which we provide 2023 data as a snapshot sample for you.
Some of what is reported below:
Attorneys for each MCA company and how many lawsuits they have filed since January 2023;
The number of lawsuits filed by each MCA company through August 2023;
The number of lawsuits are filed by each attorney;
The percentage of lawsuits that go unanswered and are not contested by small business owners;
The percentage of lawsuits that become judgements for each attorney;
The percentage of lawsuits that do not receive judgments because they are contested by firms and attorneys like Beacon Client Solutions.
If you are being sued, harassed, have your funds frozen (UCC), its likely from one of the groups that we are describing whose data are highlighted below. -
The Center for Merchant Cash Advance Research
The Center for Merchant Cash Advance Research was started to better understand the Merchant Cash Advance industry from a different perspective than what is usually conducted. For the most part, MCA companies have not only been unregulated, so have their counterparts in collections and their attorneys. From our experiences, in many cases the attorneys and collections firms are no different than the MCA companies. Each day there are many lawsuits filed by law firms representing MCA companies and seldom if at all are their any review, let alone spotlighting of any of the actions of these entities.
From our work, we are the first to begin to provide content without bias of what actually occurs in the industry. To us, the numbers speak for themselves and what we learn (and have learned) has shaped much of the work that our team at Beacon Client Solutions has conducted to help our clients.
The Players - MCA Companies, Their Collections Firms, and Their Attorneys
Overall, the community of the MCA companies, their collections firms, as well as their attorneys are a rather small community. There are a ton of MCA companies out there. However, when you begin to unpack who those companies are, the majority of MCA work is conducted by a few companies and there are a bunch of smaller companies who get into the mix but in most cases are just looking for the quick money making schema associated with MCA.
Overall, we have combed tens of thousands of cases nationally on MCA. In particular, New York, where most MCA cases are filed to go after small business owners because the laws are generally friendly to their cause is our area of interest. So far, in the first 8 months (actually less) MCA attorneys have filed well over 12,000 (12,270) lawsuits against small business owners. On August 22nd, that is roughly 158 business days (including weekends) meaning that each day, on average about 78 lawsuits are filed against small business owners in New York.
So, who are the players? In our first attempt to highlight who these people are who go after the small business owners who have had issues with their advances, we are reporting the most prevalent law firms and the number of lawsuits, as well as where they filed those lawsuits which aim at recovering the funds which go unpaid to the MCA companies.
Who are the Players?
Below we have our graphic of what attorneys (law firm) have filed lawsuits against small business owners on behalf of the MCA companies from January to August 2023.
Some of these number are staggering. For instance, attorneys such as Ariel Bouskila (1,149), Adam Feldman (1,112), David Fogel (1,287), and Steven Zakharyayev (1,121) have filed over 1,000 lawsuits this year on behalf of MCA companies. While we believe that there are some other attorneys who have filed lawsuits on behalf of MCA companies, the graphic below provides a sample of who is doing what.
Regardless of who these attorneys work with, they are charged with going after those who have not paid back their Merchant Cash Advances, for one reason or another.
Who are the 25 most litigious MCA companies?
As we continue to follow the trends in the MCA industry, we always track the number of lawsuits that MCA companies file against small business owners. Some of the MCA companies can be quite aggressive in taking legal action against small business owners. While we have reported on those trends, the fastest to litigate range from 8-12 days following the first NSF.
In the graphic below, we have shown the players who sue the most small business owners. In the past we have not included the MCA company The LCF Group. This time, we have decided to add their company to our data set.
The LCF Group, also known as Last Chance Funding to date this year has filed over 1,100 lawsuits against small business owners which doubles Arsenal Funding, who we have seen file a lot of lawsuits this year. We will continue to study why LCF files so many lawsuits against small business owners.
Top Ten List of Most Litigious MCA Companies
The LCF Group (1,102 Lawsuits File in 2023)
Prosperum Capital Partners dba Arsenal Funding (480 Lawsuits File in 2023)
Cloudfund (Delta Bridge and Cloudfund) (449 Lawsuits File in 2023)
Everest (EBF) (354 Lawsuits File in 2023)
CFG Merchant Solutions (320 Lawsuits File in 2023)
Newco Capital Group (268 Lawsuits File in 2023)
Fora Financial (266 Lawsuits File in 2023)
Pearl Delta Funding (251 Lawsuits File in 2023)
Itria Ventures (230 Lawsuits File in 2023)
Byzfunder NY (219 Lawsuits File in 2023)
In New York, where are the lawsuits filed?
As we collect mounds of data on the MCA lawsuits filed in New York, below is a list of what counties the lawsuits were filed in by the MCA attorneys listed above. Why is this important? Things such as time time to judge might make a difference in some cases.
Furthermore, some attorneys may attempt to file some lawsuits in smaller counties to shield them from attorneys and settlement firms who hope to help the clients stave off the lawsuits by the MCA companies.
The most litigious MCA counties in 2023
The Biggest Nugget - those who do not answer their lawsuits end up receiving a judgement most of the time; Those who do answer their lawsuit receive a judgement less than 10% of the time
We collected and provided data for each of the attorneys mentioned above. We also collect information on judgements and are reporting the following below.
Dr. Thomas Tramaglini is the Director of Operations and Negotiation for Beacon Client Solutions, a company that supports small businesses on a host of fronts, especially MCA debt. Thomas has been a small business owner for many years, as well as held leadership positions in several organizations and companies. Thomas holds a B.A. in History, as well as Master’s and Doctorates in Organizational Leadership from Rutgers University, The State University of New Jersey.
Disclaimer: Beacon Client Solutions is not an accountancy, or a law firm. We are business consultants. While Beacon works with outstanding attorneys and accountants, we cannot and do not provide legal or tax advice. All our work is connected to those who are legally certified to give such advice. Beacon does have a longstanding body of work in MCA resolution and understands what small business owners deal with, specific to MCA. Beacon Client Solutions serves clients in all 50 states, Puerto Rico, Mexico and Canada.
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