New York's Attorney General found the Yellowstone Capital network charged up to 820% APR [1]. The 2025 judgment canceled $534.5 million owed by 18,000+ businesses.
No regulator publishes an average MCA APR. What exists is a trail of court and enforcement records. Those records put real annual rates on factor-rate deals.
Key Takeaways
- The NY AG found Yellowstone Capital's network charged up to 820% APR [1].
- That 2025 judgment totaled $1.065 billion and canceled $534.5 million in MCA balances [1].
- The SEC alleged Par Funding charged some merchants more than 400% interest [3].
- A federal court in New York calculated 278.5% interest in Fleetwood Services v. Ram Capital [4].
- Six court- and regulator-stated rates range from over 50% to 820% a year [1][3][4][9].
- Fed staff estimate a 1.15 factor rate works out to roughly 70% APR [9].
- 60% of online-lender borrowers said costs ran higher than expected, per a Fed survey [10].
- The NY AG says 97% of about 3,000 MCA arbitrations had no business appearance [8].
- California and New York collect MCA APR data. Neither publishes aggregates we could find [14][15].
What Is the Average APR on a Merchant Cash Advance?
Nobody publishes a true average. The best public evidence is court and regulator records. Those put MCA rates between 50% and 820% a year.
Six rates made the cut. Each came from a judge, a regulator or a complaint.
| Case or source | Stated rate | Year | Type of figure |
|---|---|---|---|
| Yellowstone Capital network (NY AG) [1] | Up to 820% APR | 2025 | Independent (judgment) |
| Par Funding (SEC complaint) [3] | More than 400% | 2020 | Independent (allegation) |
| Fleetwood Services v. Ram Capital, S.D.N.Y. [4] | 278.5% | 2022 | Independent (court calc) |
| Lateral Recovery v. Queen Funding, S.D.N.Y. [4] | 100% to 300% | 2022 | Independent (pleaded) |
| Fed staff example, 1.15 factor [9] | About 70% | 2025 | Independent (Fed calc) |
| Haymount Urgent Care v. GoFund Advance, S.D.N.Y. [4] | Over 50% per year | 2022 | Independent (pleaded) |
These are not a random sample. Cases reach court when something goes wrong. So treat the list as a floor for bad deals and nothing more.
Bars scaled so 820% fills the track. Sources: NY AG [1], SEC [3], S.D.N.Y. cases via Crowell & Moring [4], Federal Reserve [9].
50% to 820%
Range of the six stated annual rates. These come from litigation, so they skew toward bad deals. See methodology.
Factor Rate vs. APR vs. Effective Rate: What's the Difference?
A factor rate is a flat multiple. A 1.15 factor on $10,000 means you repay $11,500. Speed doesn't change that.
An APR annualizes the cost. It accounts for how fast you repay. Fast repayment on a flat fee pushes the APR up.
Effective rate is loose industry talk. People use it to mean an APR-style figure someone calculated.
Fed staff put a number on the gap in a 2025 publication. An advertised 1.15 factor rate equals roughly 70% APR [9].
| Term | What it tells you | What it hides | Required disclosure? |
|---|---|---|---|
| Factor rate | Total payback as a multiple | Time. A 3-month and 12-month deal look identical | No federal rule |
| APR (estimated) | Annual cost, adjusted for payment speed | Assumes a fixed schedule that may slip | CA and NY require it on covered deals [14][15] |
| "Effective rate" | Whatever the speaker calculated | The method | No standard definition |
New York has required APR disclosure since August 1, 2023 [15]. It covers deals up to $2.5 million. California runs a similar rule [14].
So if you're in either state, ask for the APR in writing. You're entitled to see it on covered offers.
Factor Rate to APR Estimator
What APR is hiding inside your factor rate?
How to use this: enter the factor rate and the months you expect to repay.
The tool assumes equal payments every business day, about 21 a month. Pick weekly if your offer debits weekly.
1 = (F / n) × (1 - (1 + i)^-n) / i for the periodic rate i. Then APR = i × periods per year. F is the factor rate and n is the number of payments.Estimate for comparison only. Fees, slower sales and missed debits change the real figure. Not financial advice.
Check it against the Fed. A 1.15 factor over five months returns about 68%. That lands close to the Fed staff's roughly 70% example [9].
Want to line an MCA up against other offers? Our capital cost multiple guide puts them on one scale.
What Is the Default Rate for Merchant Cash Advances?
There is no public market-wide MCA default rate. No regulator collects one, and no funder we found publishes one.
The closest public number comes from a lender, not an MCA funder. Enova's management put small business net charge-offs at 4% to 5% per quarter [13].
That book is installment loans and credit lines through OnDeck and Headway. It is not MCA data. It is also self-reported.
| Figure | Value | What it covers | Source type |
|---|---|---|---|
| Enova small business net charge-offs [13] | 4% to 5% per quarter | Enova small business book, not MCAs | Self-reported |
| Enova Q2 2026 small business originations [13] | $1.6 billion | Same book | Self-reported |
| Enova avg annualized yield, installment / LOC [12] | 48% / 49% | Terms of 6 to 24 months, avg 15 | Self-reported (10-K) |
| Market-wide MCA default rate | Not published | n/a | n/a |
Note Enova's yield. A public fintech lender reports 48% to 49% on short business credit [12]. Every court-stated MCA rate above 50% sits higher.
What Happens When You Default on a Merchant Cash Advance?
Enforcement records show what collection can look like. None of this is typical by definition. It is what regulators chose to prosecute.
The NY AG alleged Yellowstone-linked funders debited fixed amounts over 60 or 90 days [2]. That complaint sought $1.4 billion in interest and fees.
In 2026, the AG sued an arbitration service called Rapid Ruling. It found that 97% of about 3,000 MCA arbitrations had no small-business appearance [8].
In plain terms, most businesses never showed up to defend themselves. Awards can follow anyway.
97%
Share of roughly 3,000 MCA arbitrations, over three years, where no small business appeared. NY AG complaint, 2026 [8]. An allegation, not a finding.
The FTC documented a different problem. Yellowstone kept withdrawing money after balances were repaid, the agency alleged [6].
That case settled for $9,837,000 in 2021 [6]. The FTC later returned $9.7 million to 7,731 businesses [7].
Those refunds covered 51% of losses. The average check was over $1,200 [7].
A court also entered a $20.3 million judgment against MCA operator Jonathan Braun [5]. That was $3,421,067 in redress plus $16,956,000 in penalties.
How Big Is the Merchant Cash Advance Industry?
Nobody counts. The federal rule that could have produced a number left MCAs out entirely.
The CFPB filed its Section 1071 final rule on April 30, 2026. It requires zero MCA providers to report [16]. Demand is another story.
Bars scaled so 100% fills the track. Federal Reserve Banks, SBCS 2026 (n=6,525) and 2025 (n=7,653) [10][11].
Self-reported survey responses from employer firms. Convenience sample, weighted.
The 29% figure is the one to watch. Fintech demand grew from 17% of applicants in 2020 [10].
And 60% of those online borrowers said costs came in higher than expected [10]. The survey fielded 6,525 firms from September to November 2025.
For contrast, small banks fully approved 57% of applicants in the same survey [10].
One more scale marker: Par Funding raised nearly $500 million from about 1,200 investors [3]. That money funded MCAs through unregistered notes, the SEC alleged.
What Are the Risks of a Merchant Cash Advance, Per the Records?
The enforcement file points to four repeat risks. Each one has a dollar figure attached.
| Risk | Record | Amount | Source type |
|---|---|---|---|
| Extreme annual cost | NY AG v. Yellowstone network | Up to 820% APR; $1.065B judgment [1] | Independent |
| Balances canceled as unlawful | Same judgment | $534.5M across 18,000+ businesses; $16.1M cash restitution [1] | Independent |
| Debits after payoff | FTC v. Yellowstone | $9,837,000 settlement [6] | Independent |
| One-sided dispute process | NY AG v. Rapid Ruling | 97% of ~3,000 arbitrations, no appearance [8] | Independent (allegation) |
| Operator misconduct | FTC v. Braun (RCG Advances) | $20.3M judgment [5] | Independent |
| Funder fraud | SEC v. Par Funding | Nearly $500M raised from ~1,200 investors [3] | Independent (allegation) |
Canceled debt
MCA balances wiped for 18,000+ businesses, including 1,100+ in New York [1].
$534.5M
About half the judgment
Cash back now
Immediate restitution paid out under the settlement [1].
$16.1M
Across 25 affiliated companies
NY Attorney General, 2025 [1]. Totals as stated by the AG. The "about half" is our rounding of $534.5M / $1.065B.
If you already carry a costly advance, look at how others exit. Our guide on replacing an MCA with revenue-based financing covers the mechanics.
What Nobody Measures About MCA Costs
The biggest questions people ask have no public answer. Some of that data exists. It just isn't published.
| Question people ask | Why no public data exists | Closest proxy |
|---|---|---|
| Market-wide MCA default or loss rate | No regulator collects it. Funders don't publish it. | Enova 4% to 5% quarterly charge-offs, non-MCA [13] |
| Actual APR distribution across all MCAs | CA DFPI collects min, max, mean and median APR in six size bands. NY DFS collects annual reports. Neither posts aggregates we found. | Court-stated rates, 50% to 820% [1][3][4] |
| National MCA volume | CFPB Section 1071 final rule excludes MCA providers | Fed SBCS demand shares [10] |
| How often businesses stack advances | No survey or regulator tracks stacking | None found |
| MCA-specific approval rates | SBCS groups MCAs with loans and credit lines | Small bank full approval, 57% [10] |
| Broker commission share of MCA cost | Not disclosed in any public dataset | None found |
California's first APR reports were due March 15, 2025 [14]. New York's annual reporting began April 30, 2025 [15].
So regulators already hold the data. Publishing the aggregates would answer the question in this article's title.
Rule summaries via Hudson Cook [14], Buchalter [15] and deBanked [16]. Checked in September 2026.
Methodology: How We Built This Dataset
We collected 26 data points from 16 source URLs published between 2020 and 2026. Every figure traces to a page we opened.
11
Tier 1 source URLs
5
Tier 2 and 3 (law firm and trade press)
19
Independent figures used
7
Self-reported figures used
Tier 1 means a regulator, court record or SEC filing. Tier 2 is a law firm summarizing a ruling. Tier 3 is trade press.
Independent means a regulator, court or third party stated it. Self-reported means survey respondents or a company described themselves.
| Derived number | Formula | Result |
|---|---|---|
| Range of stated annual rates | Lowest (Haymount, over 50%) to highest (Yellowstone, 820%) | 50% to 820% |
| Median of stated rates | Sorted: 50, 70, 200, 278.5, 400, 820. Median of middle two. | (200 + 278.5) / 2 = 239.25% |
| Yellowstone canceled share | $534.5M / $1.065B | 50.2% |
| Calculator check, 1.15 factor, 5 months daily | Solve 1 = (1.15 / 105) × annuity factor; i × 252 | About 68% |
The median is a summary of figures stated by courts and regulators. It is not an IRR we recomputed from contracts.
For Lateral Recovery we used the 200% midpoint of its 100% to 300% range. Par Funding and Haymount are floors, entered at 400% and 50%.
Selection bias warning. Every rate here comes from litigation or enforcement. Deals that go smoothly rarely produce public records.
Several figures are allegations in complaints, not final findings. We label them that way.
We excluded uncited estimates from competitor "MCA statistics" pages, including crestmontcapital.com. None named a source.
Our research date was September 24, 2026.
Last updated: September 25, 2026. We re-check these records quarterly.
Frequently Asked Questions
No regulator or funder publishes a market-wide MCA default rate. The closest public figure is Enova's 4% to 5% quarterly net charge-offs. That covers small business loans and credit lines, not MCAs, and is self-reported.
Funders collect through arbitration and the courts. The NY AG says 97% of about 3,000 MCA arbitrations had no small-business appearance. This is general information, not legal advice.
No official average exists. Court and regulator records put stated MCA rates between 50% and 820% a year.
A factor rate is a flat payback multiple, such as 1.15. An APR annualizes it based on repayment speed. Fed staff estimate a 1.15 factor equals roughly 70% APR.
No regulator data measures it. Court judgments and arbitration awards do appear in enforcement cases. Ask each funder in writing whether it reports to credit bureaus. If you signed a personal guarantee, your own finances are exposed too.
No official volume count exists. The CFPB's Section 1071 rule excludes MCA providers. In a Fed survey, 38% of firms applied for a loan, credit line or MCA.
Records show very high annual costs, debits after payoff and one-sided arbitration. One NY AG judgment canceled $534.5 million in MCA balances owed by 18,000+ businesses.
Sources and References
- NY Attorney General, $1 billion settlement with predatory lender Yellowstone Capital (2025)
- NY Attorney General, lawsuit against large-scale predatory lending operation (2024)
- U.S. SEC, Litigation Release No. 24860, Par Funding (2020)
- Crowell & Moring, Merchant cash advance redux: loan vs. true sale (2022)
- FTC, Court enters $20.3 million judgment against MCA operator Jonathan Braun (2024)
- FTC, Cash advance firm to pay $9.8M to settle overcharging complaint (2021)
- FTC, Returns more than $9.7 million to small businesses harmed by Yellowstone Capital (2022)
- NY Attorney General, lawsuit against sham arbitration service (2026)
- Federal Reserve Board, Consumer and Community Context (March 2025)
- Federal Reserve Banks, Small Business Credit Survey, 2026 Report on Employer Firms
- Federal Reserve Banks, Small Business Credit Survey, 2025 Report on Employer Firms
- Enova International, Form 10-K for fiscal 2025 (SEC EDGAR)
- deBanked, Enova originated $1.6B in small business loans in Q2 (2026)
- Hudson Cook, California DFPI final rules on commercial financing UDAAP and annual APR reporting (2023)
- Buchalter, NY DFS final regulation implementing the commercial finance disclosure law (2023)
- deBanked, Merchant cash advances excluded from final CFPB small business loan data collection (2026)
Cite This Page
APA: Voss, D. (2026, September 25). What a merchant cash advance really costs, per the courts. Rev Boost Funding. https://revboostfunding.com/merchant-cash-advance-true-cost-data/
HTML:
<a href="https://revboostfunding.com/merchant-cash-advance-true-cost-data/">Merchant cash advance true cost data</a> (Rev Boost Funding, 2026)
Changelog
- 2026-09-25: Published with 26 data points from NY AG, SEC, FTC, Federal Reserve, court and state rule sources.
Ready to check your options?
Rev Boost Funding connects operators with independent financing partners. Not a lender. Affiliate partnerships present.
Financing costs money. Run every offer through the calculator above before you sign.
Check Capital Eligibility → You Finished This: Add as Preferred Source