May 2, 2018
Right now, there are hearings on a bill in California [ SB 1235 ], that would require merchant cash advances [MCA’s] and factoring products to disclose their APR.
They really don’t want to disclose that number!
So, the industry and lobbyists are out in force to kill the bill, whining that it is impossible to compute the APR because the amount of time to pay back is variable or unknown.
Here’s a simple solution:
They could just say: If the advance is 3 months, it will cost you and APR of “X”,
or if it is 9 months it will cost you and APR of “Y”.
But they don’t want to because then the APR would be revealed to be astronomical, like 40% or 120% or even 300% – we’ve seen them all.
Here is more on calculating APR.