The words on your agreement, translated

Twenty-nine terms from the funding contract and from the papers that arrive after it, each with the statute behind it, where there is one, and what it means for you.

Merchant cash advance (MCA): A purchase of a fixed dollar amount of your future receivables (the purchased amount) for a smaller sum paid now (the purchase price), collected through fixed daily or weekly debits. Written as a sale so that the usury laws, which govern loans, do not apply on their face.
Factor rate: The multiplier between what you received and what you must pay back. A 1.35 factor rate on $50,000 means $67,500 comes back. It is not an interest rate; collected daily over a few months it usually converts to an annual rate well into three figures. Convert yours.
Purchased amount / purchase price: The agreement's names for the payback figure and the advance. Funders use them because "loan" and "principal" would concede the recharacterization point.
Specified percentage: The share of your daily receipts the funder is nominally buying, for example 15%. The daily debit is supposed to approximate that share. When the debit is a fixed number regardless of your sales, the specified percentage is doing no work, and that matters in court.
Reconciliation (true-up): The clause that lets you ask the funder to adjust the daily debit to match your actual receipts. A genuine reconciliation right is the first LG Funding factor. A right that exists on paper but is never honored, or is hedged with conditions nobody can meet, is evidence the deal is a loan.
Holdback: The share of your card sales the funder keeps. It is the same idea as the specified percentage, used when the funder collects through your card processor rather than by ACH.
ACH debit: The automatic bank pull that takes the daily or weekly payment. Revoking the authorization with your bank stops the pull; it does not end the obligation, and most agreements call it a default.
Stacking: Taking a second, third or fifth advance while earlier ones are still being collected, usually because the earlier ones made payroll impossible. The earlier agreements typically prohibit it and treat the new advance as a default.
Renewal / double dip: Refinancing an unpaid balance into a new advance so that you pay a second factor rate on the old advance's unpaid balance, which already includes the first one. The cost compounds fast.
Confession of judgment (COJ): An affidavit you signed at funding admitting a debt, which the funder can file with a county clerk to obtain a judgment without a lawsuit, a summons or a judge (CPLR 3218). Since 2019 a New York clerk may not enter one against a non-New-York debtor. More.
Sum certain: The requirement that a confession affidavit state a fixed amount justly due. Overstated payoffs, unearned fees and default interest entered as if confessed are grounds to vacate.
Restraining notice: A one-page form a judgment creditor's attorney serves on your bank under CPLR 5222. The bank must freeze up to twice the judgment for one year. No judge signs it. Relief comes by motion under CPLR 5240. More.
Information subpoena: A set of written questions about your assets served under CPLR 5224, often on your bank and your customers at the same time as the restraint.
Levy / execution: The step in which the sheriff or a city marshal takes the restrained money out of the account under an execution (CPLR 5230, 5232). A restraint freezes; a levy takes.
Turnover proceeding: A special proceeding under CPLR 5225 or 5227 to make a bank or a customer pay the judgment creditor the money it holds for you or owes you.
Order to show cause (OSC): A motion brought on an accelerated schedule that a judge sets by signing the order. It can include a temporary restraining order stopping enforcement while the motion is heard. The vehicle for emergency relief from a restraint or a judgment entered by confession.
Temporary restraining order (TRO): The interim order inside an order to show cause that holds things in place until the return date. In this practice it usually means "the funder may not levy on the account before the judge hears us."
UCC-1 financing statement: A public notice filed with the Department of State claiming a security interest in your assets. Effective only if you authorized it (UCC 9-509). MCA funders routinely file blanket "all assets" statements and leave them on record after payoff. More.
Termination statement: The filing that ends a UCC-1. Once nothing is owed and the secured party receives your authenticated (signed, written) demand, it has 20 days to file or send one (UCC 9-513(c)). Failure exposes it to $500 per filing plus actual damages (UCC 9-625). Run the clock.
Personal guaranty: Your personal promise behind the business's obligation. A payment guaranty makes you liable when the business does not pay; a performance guaranty makes you liable only if the business breaches specific promises in the agreement (covenants), which is a much narrower thing and often what MCA guaranties actually are. More.
Summary judgment in lieu of complaint (CPLR 3213): A fast-track lawsuit on an instrument for the payment of money only, meaning a document that is nothing more than a promise to pay. Funders use it on guaranties. You get a return date instead of an answer deadline, and the opposition has to be in before it.
Forum selection clause: The paragraph that names the state and court where every dispute will be heard, usually New York. It is why a merchant in Texas is sued in Kings County. Paired with a New York choice of law clause, it also means New York law on confessions of judgment and usury applies to the funder.
Usury: Charging more interest on a loan than the law allows. New York caps interest on loans at 16% per year civilly (General Obligations Law § 5-501) and makes charging over 25% a crime (Penal Law § 190.40). Corporations cannot raise civil usury as a defense but can raise criminal usury. None of it applies unless the MCA is a loan, which is the recharacterization question.
Recharacterization: The argument, called reclassification elsewhere on this site, that an agreement written as a purchase of receivables is in substance a loan. Courts weigh three things from LG Funding, LLC v. United Senior Props. of Olathe, LLC, 181 A.D.3d 664 (2d Dep't 2020): a real reconciliation provision, a finite term, and whether bankruptcy is an event of default. If it is a loan, the rate, the usury laws and the defenses that come with them are all in play.
Answer / pre-answer motion: Your response to a summons and complaint. Generally due 20 days after personal delivery in New York, otherwise 30 days after service is complete (CPLR 320(a)). A motion to dismiss under CPLR 3211 made in that window extends the time to answer. Count the days.
Default judgment: The judgment a court enters when the deadline passes with no answer. A restraining notice usually follows quickly. Vacating one requires a reasonable excuse and a meritorious defense (CPLR 5015(a)(1)), which is harder than answering on time.
NYSCEF: The New York State Courts Electronic Filing system. It is where the summons, the affidavit of service, the confession of judgment and our order to show cause all live. Emergency applications are filed there the day they are ready.
ISO / broker: The independent sales organization that placed the advance and took a commission. Often the person who made the oral promises that are not in the contract, which can matter to a claim of fraudulent inducement (being talked into the deal by false statements).
Syndication: Several funders quietly sharing one advance. It is why a settlement with the name on your agreement sometimes does not end the calls.

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