The merchant cash advance business has been in growth mode since the 2008 financial crisis when major banks began cutting back on small business loans. Stepping in to fill the void, merchant cash advance companies provided an estimated $19 billion in funding to small businesses last year, up from $8 billion five years ago.
"We've started suing some of them and I'm looking for a systemic solution that makes sure they can all be wiped out before they do more damage." Brian Miller, a lawyer for Vagnozzi, said in a statement that the case against his client related to just one part of his business."Based on all of the information Mr. Vagnozzi was provided by Par, the Par Funding business appears to be a legitimate business providing financing to small businesses, some of which are now experiencing financial difficulties in the middle of the pandemic and economic downturn.
Some merchants told NBC News they were forced to sell their businesses to get out from under their obligations to merchant cash advance companies. Cook said RCG's automatic withdrawals were soon eating away more of the clinic's cash flow than it could withstand. The clinic's board decided in early 2018 to stop the payments.
"The clinic I started continues to serve and does good work," Cook told NBC News."But I lost something I had started from scratch."Letitia James, New York state's attorney general, is continuing to investigate the merchant cash advance industry, according to her spokesman, Fabien Levy."Many small businesses are struggling and trying to figure out how they can get by," Levy said.
gmorgenson Everything seems 'lightly regulated' in the Trump era.
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