[Sean Cash]

I think the big grey area in the legal department is the fact that an MCA is a purchase and sale of credit card receivables and firms like IOU are doing true loans. MCA's don't legally impede loans. Any merchant can go get a loan from a bank with an mca in place. A loan from IOU is no different.

I think this is where people get tripped up. Many MCA contracts that buy future receivables specifically state that the merchant is not allowed to obtain any type of financing at all as part of the terms and conditions. The contract essentially makes applying for a business credit card a breach of contract. It doesn't matter what IOU does or doesn't do. Sellers of future receivables are barred from loans too.

[Sean Cash]

This is interesting, section 9 of that contract prevents the merchant from working with any other MCA funder at all (including on a payoff) unless First Funds denies them for a renewal:

9. Sale of Additional Future Receivables; Schedules; Right of First Refusal. Nothing herein shall obligate either party to sell and purchase future credit card receivables; however, Seller grants Purchaser the right of first refusal to purchase any such additional future credit card receivables that Seller may wish to sell during the term of this Agreement and during the period ending ninety (90) days after termination of this Agreement. Under such right of first refusal, if Seller desires to sell additional future credit card receivables, Seller agrees to sell such receivables to Purchaser only, and not to any other prospective purchaser, so long as Purchaser purchases such future credit card receivables on terms that are no less favorable to Seller as the terms and conditions of this Agreement.