The Legal Ground You’re Standing On
Ohio MCA law: the three facts that shape every option
Every resolution strategy — renegotiation, settlement, defense, refinancing — plays out differently depending on these three pieces of Ohio law. A firm that can’t speak to them isn’t the best firm for a Ohio file.
1Usury limits & the recharacterization question
Ohio's civil usury statute (ORC 1343.01) caps written-contract interest at 8% — but exempts most commercial credit, including loans over $100,000 and business-purpose loans to entities like LLCs and partnerships. Criminal usury (ORC 2905.21–.22) reaches charging over 25% per year on an extension of credit unless otherwise authorized. MCAs are structured as receivables purchases rather than extensions of credit, so funders take the position that neither cap applies — and even on recharacterization, the business-entity exemptions would often leave no civil rate cap. The practical consequence: for Ohio merchants, the leverage lives in cognovit-judgment procedure and contract analysis, not usury math.
Sources: ORC 1343.01 (civil usury; commercial exemptions) · ORC 2905.21 (criminal usury definition) · LegalClarity — Ohio usury framework overview
2Confessions of judgment in Ohio
Cognovit judgments live in commercial deals Ohio is one of the few states where confession of judgment remains a real commercial weapon, via cognovit notes under ORC 2323.13: judgment can be entered without prior notice, provided the warrant of attorney is produced, venue is proper (where the maker resides or signed), and the instrument carries the statutory conspicuous warning verbatim. Consumer transactions are excluded — courts lack jurisdiction over consumer cognovits — but business MCA agreements qualify. Debtors attack cognovit judgments through Civ.R. 60(B) motions alleging a meritorious defense to the debt's validity, amount, or the confession procedure. If you run an Ohio business and signed an MCA with a cognovit provision, this is the first thing an advisor should look at.
Sources: ORC 2323.13 (cognovit procedure; consumer exclusion) · KJK — Sutton Bank v. Progressive Polymers (2020-Ohio-5101)
3Commercial financing disclosure: where Ohio stands
Ohio has not enacted a commercial financing disclosure law covering MCAs — multi-state surveys of enacted statutes (California, Connecticut, Florida, Georgia, Kansas, Missouri, New York, Utah, Virginia) list nothing enacted or pending in Ohio. Ohio merchants therefore hold none of the pre-signing cost-disclosure rights businesses in those states now have. Combined with live cognovit practice, that makes pre-signing contract review more consequential in Ohio than in almost any other large state.
Sources: Alston & Bird — state commercial financing disclosure law survey
How funders actually enforce here: Funders whose contracts contain Ohio-compliant warrants of attorney can take cognovit judgment against a business without prior notice (ORC 2323.13), subject to venue and warning-language requirements and later Civ.R. 60(B) challenge. Funders holding out-of-state judgments domesticate them under ORC 2329.022 and enforce like any Ohio judgment — though since New York's 2019 CPLR 3218 amendment, NY confessions against Ohio merchants are effectively finished. Post-judgment, creditors garnish bank accounts and non-earnings property under ORC 2716.01, and funders routinely perfect UCC-1 liens searchable through the Ohio Secretary of State's UCC portal. ORC 2323.13 (cognovit judgments) · ORC 2329.022 (foreign judgment filing) · ORC 2716.01 (garnishment)
