On July 16, 2024, Justice Ruchelsman of the Kings County Commercial Division issued a decision in RDM Capital Funding v. Stellar Beach Rentals LLC, 2024 NY Slip Op. 32482(U), holding that a merchant cash advance agreement was not a loan, and thus was not subject to the usury laws, explaining:
It is well settled that if the party that provided the funds is absolutely entitled to repayment in all circumstances then a loan exists, however, if the provider is not absolutely entitled to repayment then the transaction is not a 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. The court already explained that since the contract contained a reconciliation provision the plaintiff was not entitled to payment in all circumstances. Consequently, the contract is not a loan and not subject to usury. The defendants have not submitted any evidence raising any questions of fact in this regard.
(Internal citations omitted).