MCA litigation — New York
New York is where most MCA lawsuits are filed.
Merchant cash advance funders overwhelmingly choose New York courts — Nassau County, Kings County, and Queens County Supreme Court — to file collection actions, regardless of where the business operates. Understanding New York's role in MCA litigation is essential for any business owner facing a claim.
Request a confidential case reviewWhy New York courts
Forum selection clauses and New York jurisdiction.
Most MCA agreements contain a forum selection clause requiring disputes to be litigated in New York. Funders choose New York because its courts process commercial matters efficiently, and because out-of-state defendants often fail to respond — resulting in quick default judgments. Whether a forum selection clause is enforceable against an out-of-state defendant is a legal question that can be raised as a defense.
New York courts in MCA matters
Where MCA cases are filed.
Nassau County Supreme Court
Nassau County is one of the most common venues for MCA collection actions in New York. Many of the largest MCA funders file the majority of their cases here.
Kings County Supreme Court
Kings County (Brooklyn) Supreme Court is another frequently used venue for MCA disputes, particularly for funders based in the New York City area.
Queens County Supreme Court
Queens County Supreme Court handles a significant volume of MCA matters, including cases involving businesses from across the country.
New York usury law
New York's criminal usury threshold is 25% per annum.
New York Penal Law § 190.40 makes it a felony to charge more than 25% annual interest on a business loan. Courts have found that certain MCA agreements are, in substance, loans — not purchases of future receivables. When that recharacterization applies and the effective rate exceeds 25%, the agreement may be void and unenforceable under New York law. This defense must be raised in a timely answer to the complaint.
Confessions of judgment
New York restricted COJs for out-of-state defendants in 2019.
Prior to 2019, MCA funders routinely used confessions of judgment (COJs) to obtain judgments against out-of-state businesses without notice or a court hearing. New York law now prohibits COJs against defendants who do not reside or maintain a principal place of business in New York. COJs entered before the 2019 change may still be subject to challenge depending on the circumstances.
Facing an MCA lawsuit filed in New York?
Hartman Blake handles MCA matters filed in New York courts for business owners across the country. A confidential review is the first step.
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