June 1, 2026 – By Christian Smith, Berkshire Financial Services
A Texas construction company has filed a lawsuit involving several Merchant Cash Advance (MCA) agreements. The case may provide an early test of how courts interpret parts of a new Texas law that applies to certain sales-based financing transactions.
The company, G-Core Construction of San Antonio, alleges that it received about $2.5 million through five MCA agreements between October and April. According to the lawsuit, required disclosures were not provided for some of those transactions.
It is important to note that these allegations have not been proven in court.
The Amounts in Dispute
According to court filings, G-Core received about $2.5 million in funding through the agreements.
The lawsuit alleges that the company was charged approximately:
- $122,750 in origination fees
- Nearly $1.1 million in financing-related charges
G-Core also claims that the total amount being sought later grew to more than $3.5 million after additional fees, renewals, extensions, default charges, and accelerated payment demands were added.
Those figures come from allegations contained in the lawsuit.
What Is MCA Stacking?
The lawsuit also alleges that multiple MCA obligations were layered on top of one another.
This practice is commonly known as “stacking.”
In general, stacking occurs when a business takes on additional MCA funding while existing MCA obligations remain outstanding. As payments increase, cash flow can become harder to manage.
For some businesses, stacked MCA obligations can create financial pressure and make it more difficult to cover operating expenses.
The Texas Law at the Center of the Case
One of the key issues in the lawsuit involves Chapter 398 of the Texas Finance Code.
The law created disclosure and registration requirements for certain sales-based financing transactions. Depending on the facts of a transaction, some Merchant Cash Advance agreements may fall within the law’s requirements.
Among other things, the law may require providers to disclose information such as:
- The amount of funding provided
- Fees and finance charges
- Repayment terms
- Payment schedules
- Other financing costs
According to reports, four of the five agreements identified in the lawsuit involved amounts below $1 million. The court will ultimately determine whether the law applies to those transactions.
Why the Case Matters
Merchant Cash Advances have been the subject of legal disputes in several states.
Funding companies often argue that MCA agreements involve the purchase of future receivables rather than loans. In some cases, businesses have argued that certain transactions function more like loans and should be treated as such under applicable law.
In this lawsuit, G-Core is asking the court to determine whether the agreements should be treated as loans rather than receivable-purchase transactions.
The lawsuit also alleges that the funding company contacted customers, vendors, and business partners while attempting to collect funds. G-Core claims those actions interfered with business relationships and operations.
At the time of the reporting cited for this article, the allegations remained unresolved in court.
What Business Owners Can Learn
Many businesses choose Merchant Cash Advances because funding can be obtained quickly and qualification requirements may differ from those of traditional bank loans.
Before signing any MCA agreement, business owners should review:
- Total repayment costs
- Fees and charges
- Daily or weekly payment obligations
- Default provisions
- Renewal terms
- Personal guarantee requirements
Understanding these terms before accepting funding can help business owners make informed decisions.
As this case moves through the court system, business owners, attorneys, and financing companies will be watching closely. The outcome may provide additional guidance on how Texas courts interpret certain MCA-related disputes under state law.
What This Means for Your Contract
Every Merchant Cash Advance agreement is different. However, this case highlights the importance of reviewing the actual terms of your contract, including disclosure language, repayment provisions, fees, renewals, default terms, and any rights claimed by the funding company.
If your business is struggling with multiple MCA obligations, rapidly growing payment demands, or collection activity, it may be worthwhile to have your agreements reviewed by qualified financial and legal professionals. Understanding your contract and your options is often the first step toward improving cash flow and reducing financial pressure.
To speak with a Berkshire Financial Services Finance Manager about your file, call 1-800-801-1019.
Informational purposes only. Not legal advice. Berkshire Financial Services is not a law firm. Results vary.