The Legal Ground You’re Standing On
Puerto Rico 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 Puerto Rico law. A firm that can’t speak to them isn’t the best firm for a Puerto Rico file.
1Usury limits & the recharacterization question
Puerto Rico regulates interest through a civil-law usury framework, with maximum rates set administratively by OCIF's Financial Board (Junta Financiera, Act 4-1985 § 8) rather than a single fixed cap — and where usury applies, the remedy is sharp: the creditor collects only 75% of principal (31 LPRA § 10085 under the 2020 Civil Code). But the framework protects natural persons, not businesses: corporations are barred from invoking usury (14 LPRA § 3789), LLCs likewise (§ 3984), and the bar extends even to individual guarantors of corporate debt. And in February 2026 the Puerto Rico Supreme Court settled the recharacterization question in the funders' favor: in Merchant Advance v. Conceptos Cuisine (2026 TSPR 15), it held an MCA "contrato de compraventa de ingresos futuros" is a valid contract that does not violate public policy, and honored the agreement's New York choice-of-law clause. Practical meaning for a Puerto Rico merchant: courts will not rescue you from the contract — negotiation, restructuring, and procedure are where your leverage lives.
Sources: Merchant Advance, LLC v. Conceptos Cuisine, LLC, 2026 TSPR 15 (official opinion PDF) · Act No. 4 of Oct. 11, 1985, § 8 — Financial Board rate-setting (official translation) · Torres-Ocasio v. Perfect Sweet (D.P.R. 2017) — usury framework; corporate bar · OCIF — rates certified under Financial Board Reg. 78-1
2Confessions of judgment in Puerto Rico
No cognovit tradition; consent-judgment rule exists Puerto Rico has no cognovit-note tradition, but its Rules of Civil Procedure contain a little-known analog: Rule 35.4 allows judgment without trial — even before an action is filed — on a defendant's verified, signed statement authorizing judgment for a specified sum. More practically for merchants: a New York judgment is entitled to full faith and credit in Puerto Rico (28 U.S.C. § 1738 expressly binds territorial courts), recognized through the exequatur proceeding under Rule 55, where the court checks only jurisdiction, due process, and fraud — never the merits. If a funder is coming with a stateside judgment, the fight is procedural, and it is fought early or not at all.
Sources: P.R. Rules of Civil Procedure (official translation) — Rules 35.4, 55.1–55.6 · P.R. Judiciary — exequatur explainer · 28 U.S.C. § 1738 (full faith and credit in the Territories)
3Commercial financing disclosure: where Puerto Rico stands
Puerto Rico has not enacted a commercial financing disclosure law — the March 2026 Venable survey lists ten states, with Puerto Rico in none of them, and no PR bill imposing sales-based-financing disclosures was found. Combined with the corporate usury bar and the 2026 TSPR 15 ruling, Puerto Rico merchants hold fewer statutory protections than merchants in most states — which makes what you sign, and who reviews it before and after trouble starts, matter more here than almost anywhere in the country.
Sources: Venable — State Commercial Financing Disclosure Laws (Mar. 2026)
How funders actually enforce here: A funder holding a stateside judgment enforces it through the Rule 55 exequatur proceeding in the Court of First Instance; once recognized, it executes like a local judgment, with attachment (embargo), garnishment, and alienation prohibitions available under Rule 56.1. Funders can also sue directly in Puerto Rico courts — and after 2026 TSPR 15, PR courts enforce MCA contracts as written, including New York choice-of-law clauses. On liens: Puerto Rico adopted revised UCC Article 9 (Act 21-2012, amending the Commercial Transactions Act), expressly covering sales of accounts — the MCA structure — so funders perfect by filing in the Commercial Transactions Registry at the P.R. Department of State, searchable online. Check that registry for filings against your business; funders file at funding, not at default. P.R. Rules of Civil Procedure — Rules 51, 55, 56 · Act 21-2012 — revised Chapter 9 (secured transactions incl. sales of accounts) · P.R. Department of State — Commercial Transactions (UCC) Registry
Facing any of this right now? None of it is the end of your business — every mechanism above has a response, and the earlier you move, the more options you have. A free file review tells you which of these rules matters for your situation, or call (929) 263-2835.
