Author Archives: Patrick Siegfried

About Patrick Siegfried

Patrick Siegfried is the author of the Usury Law Blog. Patrick is a practicing attorney in Bethesda, Maryland. Patrick’s work focuses on issues regarding alternative small business financing. He can be reached at psiegfried@usurylawblog.com

US District Court Holds Individual Guarantors Liable for Business Loan; Rejects Usury Challenge

An alternative small business lender provided a loan to a business located in Texas. The loan was guaranteed by two individuals.  The agreement contained a choice of law provision which provided that the transaction would be interpreted and governed by … Continue reading

Posted in Choice-of-Law, Civil Usury, Federal Court, Texas | Comments Off on US District Court Holds Individual Guarantors Liable for Business Loan; Rejects Usury Challenge

New York Court Recharacterizes Merchant Agreement as Loan, Vacates Confessed Judgment and Voids Transaction

A business received financing from an alternative small business funder. The parties’ agreement stated that in exchange for the financing provided, the funder would receive 11.02% of the business’ daily receipts which the funder would take by debiting $331.82 from the … Continue reading

Posted in Criminal Usury, Merchant Cash Advance, New York, Recharacterization, Sale vs. Loan, State Court | Comments Off on New York Court Recharacterizes Merchant Agreement as Loan, Vacates Confessed Judgment and Voids Transaction

Increased Value of Pledged Stock Not Interest

A lender provided a $600,000 loan to a borrower on the condition that the proceeds be used to purchase shares of a publicly traded company. The note provided for an interest rate of 10% and granted the lender warrants to … Continue reading

Posted in Criminal Usury, Federal Court, New York, Recharacterization, Statute of Limitations | Comments Off on Increased Value of Pledged Stock Not Interest

U.S. District Court Holds that Purchase of Future Settlement Proceeds Violates Kansas Usury Law

A litigation finance firm advanced funds to an individual that was pursuing a personal injury case against a gas can manufacturer. After receiving a series of cash advances, the individual filed suit against the financing firm in U.S. District Court alleging that the … Continue reading

Posted in Civil Usury, Federal Court, Kansas, Sale vs. Loan, Usury Cap, Usury Exceptions | Comments Off on U.S. District Court Holds that Purchase of Future Settlement Proceeds Violates Kansas Usury Law

Citing Madden v. Midland Funding, Colorado Regulator Challenges Bank Partnership Model

The Colorado Administrator of the Uniform Consumer Credit Code (UCCC”) has filed complaints against two UCCC licensees alleging violations of Colorado’s usury cap. Both licensees utilize bank partnerships to originate their loans. Citing Madden v. Midland Funding, the Administrator, represented … Continue reading

Posted in Assignor-Assignee, Attorney General, Colorado, Federal Court, National Bank Act, Preemption, Usury Cap, Usury Exceptions | Comments Off on Citing Madden v. Midland Funding, Colorado Regulator Challenges Bank Partnership Model

Massachusetts State Court Rejects Choice of Law Clause, Vacates Confessed Judgment

A business located in Massachusetts received financing from a small business funder. The parties’ agreement stated that in exchange for the financing provided, the funder would receive 15% of the business’ daily receipts which the funder would take by debiting $1,549 … Continue reading

Posted in Choice-of-Law, Criminal Usury, Massachusetts, State Court | Comments Off on Massachusetts State Court Rejects Choice of Law Clause, Vacates Confessed Judgment

Citing Growing Body of Case Law, New York Court Finds Sale of Future Receivables is Not Subject to Usury Laws

A small business funder entered into an agreement with a business to purchase a portion of the business’ future receivables for an upfront lump sum. In exchange for the lump sum payment, the funder was to receive a portion of the … Continue reading

Posted in Civil Usury, Criminal Usury, Merchant Cash Advance, New York, Sale vs. Loan, State Court | Comments Off on Citing Growing Body of Case Law, New York Court Finds Sale of Future Receivables is Not Subject to Usury Laws

In Three Separate Decisions, New York Courts Find Sale of Future Receivables Not Subject to Usury Laws

In three nearly identical cases, a small business funder entered into an agreement with three separate businesses to purchase a portion of the businesses’ future receivables for an upfront lump sum. In exchange for the lump sum payment, the funder was … Continue reading

Posted in Civil Usury, Criminal Usury, Merchant Cash Advance, New York, Recharacterization, State Court | Comments Off on In Three Separate Decisions, New York Courts Find Sale of Future Receivables Not Subject to Usury Laws

Convertible Note with 150% Default Penalty Not Usurious

A creditor purchased four convertible promissory notes from a company. The notes provided that they could be converted to unrestricted common stock of the company at a 45% discount. Upon an event of default, the notes carried a penalty that required a payment from the … Continue reading

Posted in Criminal Usury, Federal Court, Interest Calculation, New York | Comments Off on Convertible Note with 150% Default Penalty Not Usurious

Despite Criminal Usury Claim, Court Compels Arbitration

A New York resident sued an alternative small business lender for, among other counts, criminal usury related to small business financing that the resident’s business had received and that the resident had agreed to guarantee. The agreement included a provision that required that “all … Continue reading

Posted in Arbitration, Criminal Usury, New York, State Court | Comments Off on Despite Criminal Usury Claim, Court Compels Arbitration