Can a New York MCA Funder Enforce a Personal Guarantee Against an Out-of-State Owner?

Can a Merchant Cash Advance Funder in New York Enforce a Personal Guarantee Against an Out-of-State Owner?

Your business is outside New York. Why is an MCA funder suing you personally in a New York court? If you signed a merchant cash advance (MCA) personal guarantee, the answer may be in the agreement’s fine print.

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New York changed its confession-of-judgment rule, CPLR 3218, so a private MCA funder generally cannot file a New York confession of judgment against a defendant with no New York residence or place of business. But that change does not cancel a personal guarantee or prevent a funder from filing a regular breach-of-contract lawsuit. The funder must pursue the claim through the court process.

An out-of-state business owner could receive a summons from New York Supreme Court in Rockland County, Manhattan, Brooklyn, Queens, or another New York county—even if the business operates in California, Texas, Florida, Georgia, or elsewhere.

Does living outside New York protect your personal assets? Not automatically. A properly enforced personal guarantee may expose the signer to a judgment beyond the business’s obligations. But a lawsuit is not a judgment, and a New York filing does not mean the funder has proved its claim.

Review these issues immediately:

1. What did you sign? Find the guarantee, any confession-of-judgment affidavit, and the clauses addressing New York courts, venue, and service of process.
2. Why was the case filed in that county? A New York forum clause and a clause naming a particular county answer different questions. Counsel can assess whether the court has personal jurisdiction and whether venue can be challenged.
3. What triggers personal liability? Some MCA guarantees depend on specific conduct or breaches. The exact wording and alleged facts matter.
4. Were you properly served? Keep the envelope, delivery records, emails, and all court papers. Jurisdiction objections can be lost if they are not raised correctly and on time.

Sued in Rockland County over an MCA you took out elsewhere? Do not assume the 2019 confession-of-judgment change makes the lawsuit invalid. Have counsel review the agreement and complaint before your response deadline, especially if the funder names you individually as a guarantor.

Credible Law helps connect business owners with legal assistance for New York MCA lawsuits, personal guarantees, jurisdiction challenges, and default judgments. We assist callers facing cases filed in Rockland County, Queens, Brooklyn, Manhattan, the Bronx, Staten Island, Nassau County, Westchester County, Albany, Buffalo, Rochester, and Syracuse.

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Call Credible Law at 888-201-0441 for a case evaluation, or visit CredibleLaw.com.

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General information only. The agreement, court papers, and facts determine available defenses.