- 1Cole Harmonson wrote that a springing DACA would stop banks from giving an MCA a DACA.
- 2Without one, he argues, no MCA can legally sweep a customer's account in Texas.
- 3He earlier called the Texas law a blueprint for other states.
Cole Harmonson, CEO of Dare Capital and a board member of the American Factoring Association, has posted an update on the new Texas merchant cash advance legislation and a campaign he describes as a fight against "MCA cronies." The update ran on the website of the Commercial Factor magazine and can be read here.
The strategy
Harmonson's approach centers on the deposit account control agreement (DACA) and the first-position requirement in the law. If a factor obtains a springing DACA, he wrote, the bank will not give anyone else, such as an MCA provider, a DACA. In his reasoning, that means no MCA can legally sweep the factor's customer's account, which he says would effectively kill MCAs in Texas.
A blueprint for other states
Harmonson had also previously shared that the factoring industry was responsible for the Texas MCA legislation and that it served as a blueprint. He suggested a similar legal framework could be attempted in other states.
Source reporting: deBanked.
