The Legal Ground You’re Standing On
Pennsylvania 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 Pennsylvania law. A firm that can’t speak to them isn’t the best firm for a Pennsylvania file.
1Usury limits & the recharacterization question
Pennsylvania's Loan Interest and Protection Law (Act 6 of 1974, 41 P.S. § 101 et seq.) sets a 6% maximum rate — but only for loans of $50,000 or less, and business loans of any amount are excluded, so most commercial financing faces no civil rate cap. Remedies where the law does apply include triple damages for excess interest and attorney's fees. Separately, 18 Pa.C.S. § 911 (Corrupt Organizations) defines racketeering to include collecting debt from lending at over 25% per annum where not otherwise authorized. As everywhere, these rules reach an MCA only if a court recharacterizes it as a loan — examining whether the funder bore real risk: the reconciliation provision, a finite term, and recourse on default or bankruptcy.
Sources: Loan Interest and Protection Law, Act 6 of 1974 (official text) · 18 Pa.C.S. § 911 — unlawful-debt collection above 25% · Levenfeld Pearlstein — MCA recharacterization in bankruptcy
2Confessions of judgment in Pennsylvania
Still enforceable in commercial contracts Pennsylvania is one of the few states where confessions of judgment remain a live commercial weapon. Under Pa.R.Civ.P. 2950–2967, a creditor holding a warrant of attorney files with the prothonotary and judgment is entered without prior notice or a hearing; the debtor's remedies are petitions to strike or open (Rule 2959). The device is abolished only for consumer credit transactions — business-to-business MCA agreements remain eligible, which makes attorney review of a Pennsylvania MCA file urgent, not optional. The counterweight: Pennsylvania courts strictly construe warrants of attorney against the creditor — in Complete Business Solutions Group v. HMC (E.D. Pa. 2019), an $11.9 million confessed judgment by an MCA funder was struck because the filing included the wrong contract and reached a guarantor the warrant didn't cover.
Sources: 231 Pa. Code ch. 2950 — Confession of Judgment for Money (Pa.R.Civ.P. 2950–2967) · Complete Business Solutions Group v. HMC (E.D. Pa. 2019, opinion PDF)
3Commercial financing disclosure: where Pennsylvania stands
Pennsylvania has no enacted commercial financing disclosure law covering MCAs. House Bill 1792 (2023–24 session), captioned "Protecting Small Businesses From Predatory Lending," would have added truth-in-lending disclosures for commercial financing — including cost expressed as an annualized rate and, notably, a private right of action with attorney's fees — but it died in the House Commerce Committee without a vote, and no reintroduction had passed as of July 2026. Practical consequence for Pennsylvania merchants: the disclosure rights that California, New York, Florida, Georgia, and Texas businesses now hold do not exist here, so the contract you sign is the whole story — read it, or have someone who reads them professionally do it.
Sources: PA House Bill 1792 (2023–24) — official bill page
How funders actually enforce here: Pennsylvania funders enforce two ways: confessing judgment directly in a Court of Common Pleas when the agreement contains a warrant of attorney (no prior notice or hearing), or domesticating an out-of-state judgment under 42 Pa.C.S. § 4306, after which it becomes a lien as of filing. Execution then targets business bank accounts and personal property. One Pennsylvania distinction: 42 Pa.C.S. § 8127 exempts wages from attachment for commercial debts, so wage garnishment is generally unavailable — pressure lands on the business's accounts and assets instead. Funders also routinely file UCC-1 liens with the Department of State. 42 Pa.C.S. § 4306 — Uniform Enforcement of Foreign Judgments Act · 42 Pa.C.S. § 8127 — wages exempt from attachment · 231 Pa. Code ch. 2950 — confession of judgment procedure
