On February 19, 2026, Justice Boddie of the Kings County Commercial Division issued a decision in Pinnacle Bus. Funding LLC v. American Iron & Crane, Inc., 2026 NY Slip Op. 30679(U), holding that questions of fact regarding the legitimacy of an agreement’s reconciliation provisions precluded summary judgment on whether the agreement was a merchant cash advance agreement, explaining:
The rudimentary element of usury is the existence of a loan or forbearance of money, and where there is no loan, there can be no usury, however unconscionable the contract may be. To determine whether a transaction constitutes a usurious loan: the court must examine whether the plaintiff is absolutely entitled to repayment under all circumstances. Unless a principal sum advanced is repayable absolutely, the transaction is not a loan. Usually, courts weigh three factors when determining whether repayment is absolute or contingent: (I) whether there is a reconciliation provision in the agreement; (2) whether the agreement has a finite term; and (3) whether there is any recourse should the merchant declare bankruptcy.
Here, plaintiff established with documentary evidence, prima facie, that the Agreement concerns the purchase and sale of future receivables, not a loan subject to usury statutes, as (i) repayment was contingent on defendants· generation of future receivables, (ii) the Agreement contains a mandatory reconciliation provision, (iii) the Agreement lacks a finite term, and (iv) the Agreement expressly provides that bankruptcy does not constitute a default event. Plaintiff has also shown that the personal guaranty renders the guarantor jointly and severally liable for the merchant’s default.
However, defendants in opposition, raise triable issues of fact as to whether the reconciliation provision contained in the Agreement provides a genuine and enforceable right of reconciliation or is illusory in nature. While the presence of a purported reconciliation provision is an indication of whether an agreement constitutes a loan and regardless of the inclusion of the buzz words purporting to confer such protection, the court must assess whether the agreement at issue before it makes clear on its face whether it conferred that right. If there is no true obligation to reconcile, despite the inclusion of a purported reconciliation provision, the true nature of the agreement will be called into question.
Here, the reconciliation clause provides, in relevant part:
4. Reconciliations …. In order to effectuate the reconciliation, any Merchant must produce with its request any and all statements (a month to date statement may be used to cover any period for which a monthly statement is not available) covering the period from the date of this Agreement through the date of the request for a reconciliation and, if available, the login and password for the Account. PBF will complete each reconciliation requested by any Merchant within two business days after receipt of proper notice of a request for one accompanied by the information and documents required for it. PBF may also conduct a reconciliation on its own at any time by reviewing Merchant(s)’s Receivables covering the period from the date of this Agreement until the date of initiation of the reconciliation, each such reconciliation will be completed within two business days after its initiation, and PBF will give each Merchant written notice of the determination made based on the reconciliation within one business day after its completion …. Nothing herein limits the amount of times that a reconciliation may be requested or conducted.
The reconciliation clause requires a merchant seeking reconciliation to provide written notice together with any and all statements and other documentation, after which plaintiff may determine whether the request is properly supported before conducting reconciliation. Such requirements may afford plaintiff discretion to delay or effectively deny reconciliation, and defendants contend that, as occurred here, despite providing financial information and engaging in extensive communications concerning declining revenues and proposed payment adjustments, plaintiff failed to timely implement reconciliation.
Furthermore, genuine issues of material fact preclude the granting of summary judgment in plaintiffs favor on liability. While plaintiff has established a prima facie entitlement to judgment through the executed Agreement, proof of funding, payment history, and evidence of defendants’ cessation of remittances, defendants raise triable issues concerning the parties’ performance under the Agreement, particularly with respect to the operation of the reconciliation provision.
Here, defendants submitted sworn affirmations and contemporaneous email communications reflecting extensive discussions among the parties concerning defendants’ declining cash flow and proposed adjustments to weekly remittances pursuant to the Agreement. Defendants contend that these communications, although not expressly labeled a “reconciliation” request, constituted a request for reconciliation or accommodation within the meaning of the Agreement, and that plaintiff failed to timely adjust payments or implement reconciliation, instead proposing alternative financing arrangements at usurious rates. Plaintiff disputes this characterization and asserts that defendants did not invoke reconciliation in the manner required by the Agreement, but does not meaningfully dispute that such communications and exchanges occurred.
Whether the parties’ communications and the financial documentation provided by defendants constituted a reconciliation request within the meaning of the Agreement, and whether the parties’ respective conduct and timing of their proposals amounted to a breach by either side, present issues of fact that cannot be resolved on summary judgment.
(Internal quotations and citations omitted).