[joerusso85]

From what I understand this is what has been argued since MCA companies have laid out specific terms over a set period of time.

If you recall, it used to be a percentage of receivables, which was legit on paper because there is risk on both sides.

In this case the Judge looked at it like this.

1. You purchase receivables based on an ESTIMATED number.
2. Receivables are payed based on that gross. Set payment and set time period.
3. Revenue increases, seller pays same
4. Revenue revenue decreases seller pays same.
5. No sales, seller still has to pay.. BIG problem. This is now a term loan. PERIOD. If you purchase receivables and there are no receivables, risk is on you, but expect a payment.

This is now considered a loan. wait until someone challanges the reporting on a credit report.. 1k per violation.

This is the judges logic as far as I read.

[CreditGuy]

Wait until someone challanges the reporting on a credit report.. 1k per violation.

Most business credit agencies don't allow MCAs to report because they aren't loans, nor are they tradelines. Interesting to see if that changes in light of this ruling.

Personal credit bureaus only let you report after default and even then, depending on who is reporting, only show collection items and/or judgements. Consumer bureaus, for now, can't/won't report it as a derogatory tradeline on a personal bureau. For starters, the natural person is only a contingent guarantor not a comaker or applicant for joint credit under ECOA.