On December 11, 2025, Justice Boddie of the Kings County Commercial Division issued a decision in EN OD Capital v. Jac Contr. Servs. LLC, 2025 NY Slip Op. 34851(U), holding that a merchant cash advance agreement was not a usurious loan, 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: (1) 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, the documentary evidence establishes 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 (i ) the Agreement expressly provides that bankruptcy does not constitute a default event. Plaintiff has also shown that the Guaranty is absolute and unconditional, rendering the guarantor jointly and severally liable for the merchant’s default.
(Internal quotations and citations omitted).