Why Is My Merchant Cash Advance Funder Calling Me, and What Can It Legally Do?

Calls from a merchant cash advance funder usually mean one of three things: a debit was rejected or missed, the funder has declared a default, or it is trying to reach the owner who signed the personal guarantee. Most of what a funder does next is lawful even when it feels relentless: calling, writing, sending notices to your customers under the lien it filed when you signed, demanding payment under the guarantee, and suing. The federal consumer collection rules many owners know about generally do not cover business debt. What still limits a funder is the FTC Act, state law, criminal law, and your own contract. What any of this means for your situation is a question for a licensed attorney in your state.

Why does a funder start calling?

Almost always because something changed on the account. The most common triggers are a rejected debit, a pattern of smaller deposits than the funder expected, a change of bank account or card processor, a new advance from another funder showing up in your statements, or a default the funder has already declared. MCA agreements commonly give the funder the right to see your bank activity, so the call can come the same day a debit fails.

The number of calls usually tracks the stage. Early calls tend to come from the funder’s own collections desk. After a default is declared, calls may come from an outside collection firm or from the funder’s attorney, and the subject usually shifts from the missed payment to the full accelerated balance. Our guide to what a default notice from your funder means covers the letter that often arrives alongside them.

Who else might be calling about the same debt?

Not every call about an MCA comes from the funder you owe. Owners in distress commonly hear from four kinds of callers:

Summarized from common MCA collection practice. Who calls, and how often, varies by funder.

The broker call deserves special caution, because a new advance taken to cover an old one is how most stacks grow. Our guide to MCA stacking shows the arithmetic.

What can a funder lawfully do?

A good deal. Under a typical MCA agreement and state law, a funder may generally call and email about a default, send demand letters, enforce the agreement’s fee and acceleration terms, keep its UCC-1 financing statement on file, notify your processor, marketplaces, or customers to pay it directly under Article 9 of the Uniform Commercial Code, section 9-406, demand payment from the owner under a personal guarantee, and sue. After a judgment, court procedures such as restraining notices and levies become available. Distressing is not the same as unlawful.

Source: Uniform Commercial Code, Article 9, section 9-406.

Why don’t consumer collection rules protect me?

Because of how the law defines a debt. The Fair Debt Collection Practices Act covers obligations arising from transactions primarily for personal, family, or household purposes, according to its definitions at 15 U.S.C. section 1692a. A merchant cash advance is a business transaction, so it generally falls outside the Act, and with it the limits on call times, call frequency, and required notices that consumer debtors rely on. State consumer collection laws built on the same model usually follow the same line. A licensed attorney can tell you whether anything in your state’s law reaches further.

Source: 15 U.S.C. section 1692a, Fair Debt Collection Practices Act definitions.

Where are the limits?

Business debt is not lawless. Four things still limit a funder:

• The FTC Act. Section 5 prohibits unfair or deceptive acts or practices in commerce, and it is not limited to consumers. The Federal Trade Commission has used it against MCA companies on behalf of small businesses.
• State law. State attorneys general enforce their own unfair practices laws. California’s Department of Financial Protection and Innovation applied prohibitions on unfair, deceptive, or abusive practices to commercial financing for California small businesses, effective October 1, 2023.
• Criminal law. Threats of violence are crimes in every state, whatever the debt.
• Your contract. The agreement defines what may be debited and when. Debits beyond what it authorizes, or after the purchased amount has been collected, are the kind of conduct regulators have pursued.

Sources: 15 U.S.C. section 45(a); California Department of Financial Protection and Innovation, commercial financing regulations, effective October 1, 2023.

The public record has other examples. In April 2021, Yellowstone Capital and related defendants agreed to pay more than $9.8 million to settle Federal Trade Commission charges that included taking money from businesses’ accounts without permission. In January 2025 the New York Attorney General secured a judgment of $1.065 billion against Yellowstone Capital and related entities, including cancellation of about $534.6 million owed by small businesses. None of this means every aggressive funder is breaking the law. It means some conduct has already been tested in court.

Sources: Federal Trade Commission, April 2021; New York Attorney General, January 2025.

What usually follows if the calls go unanswered?

The process usually continues on the funder’s schedule. A funder that cannot reach the business commonly moves on to letters, UCC notices to customers and processors, a demand on the personal guarantee, and a lawsuit, and an unanswered lawsuit can end in a default judgment. Not answering a call is not the same as missing a court deadline, but court papers, once served, carry deadlines that do run. The full sequence is in our guide to what happens if you default on a merchant cash advance.

Who should I talk to?

If the calls include threats, that is a matter for law enforcement. For everything else, a licensed attorney in your state can tell you what the funder may lawfully do in your situation, whether any conduct crosses a legal line, and what your agreement says. Where to report conduct you believe is unlawful is covered in our guide to whether debt collection laws protect business owners from MCA funders.

Anchor Resolve is not a law firm. Enrolling in a debt relief program does not stop a funder from calling, collecting, or suing while balances are being renegotiated.

Common questions