Triways trucking firm took 30-plus advances before ceasing operations
In an analysis of Subchapter V bankruptcy filings, The Wall Street Journal found merchant cash advance funders were creditors for 51% of small businesses that went bankrupt in the first nine months of 2026. Federal bankruptcy filings by small businesses — those owing no more than $3.4 million — rose 36% in the period compared with the same stretch a year earlier, according to the American Bankruptcy Institute. Creditors in more than half of those cases included companies offering merchant cash advances, the Journal found; some of those companies offer only MCAs, while others list several products on their websites.
Merchant cash advances, or MCAs, are a legal, largely unregulated financing product marketed on social media as a business lifeline: cash in 24 hours or less, easy applications, past credit troubles no problem. Funders say they don’t issue loans, which are regulated by state and federal law, and can therefore set effective finance costs in the triple digits and higher. Funders typically take payments directly from company bank accounts daily or weekly, even when that leaves firms short of cash for payroll, inventory or other operating expenses. Businesses sell future receivables to funders in exchange for fast cash at high effective costs, and firms left short of operating funds often take out more advances to cover expenses.
The pool of applicants is growing as small businesses contend with inflation, tariffs and tighter credit. Small businesses have been “increasingly seeking liquidity through merchant cash advances (MCAs), often to cover overhead and payroll expenses,” the Federal Reserve Bank of Kansas City reported in October. MCAs “have exacerbated the difficulties faced by small businesses” because of their high costs, the report said. Last year, 12% of small businesses seeking financing applied for a merchant cash advance, compared with 9% in 2024, according to a survey by the regional Federal Reserve Banks of businesses with at least one employee.
“These are the glory days,” Sean Murray, chief editor of the trade publication deBanked, said in an April 2026 interview about the state of the industry. “What is the state of the industry? This is the time to be in it.” The Small Business Administration announced last year that it would no longer refinance merchant cash advances. “Borrowers who resort to these—I almost said extortionist—borrowers who resort to going to these types of arrangements for cash” have a high fail rate, SBA Administrator Kelly Loeffler said in a presentation to SBA lenders last year.
In practice, MCA funders often squeeze as much cash as possible from struggling businesses before the firms are granted bankruptcy protection or shut their doors for good. MCA clients accept the increasingly difficult repayment conditions, in many cases, trying to salvage their life’s work and save the jobs of their employees, according to business owners who have taken out MCAs and bankruptcy attorneys.
Rather than a lifeline, merchant cash advances have been a deadly anchor for businesses around the U.S., according to bankruptcy attorneys and advisers to financially troubled companies. “An MCA can make sense for a small-business owner who has a leaky roof or other immediate need and can repay the money in 30 days,” said Michael Dal Lago, a bankruptcy attorney in Naples, Fla. “Don’t use an MCA as a line of credit. That’s a recipe for disaster.”
The arc of Triways, a family-owned trucking and warehouse business in Jurupa Valley, Calif., shows how the cycle can swallow a healthy company. Triways had navigated the ups and downs of nearly a half-century of hauling goods, earned industry awards, employed some 60 workers and took in nearly $10 million in revenue in 2024. After struggling through a post-pandemic slowdown, the company received an offer that year to serve Navy commissaries in California, Oregon, Washington and Florida — a chance to transform the business into a nationwide operation, but one that would require more truck trailers and more drivers. “I wasn’t trying to grow, but the opportunity was put on the table,” said John Jauregui, the 70-year-old chief executive.
Getting the money was easy. Jauregui said he couldn’t get additional bank financing when he took the first MCA in the fall of 2023, despite holding a conventional line of credit, and he planned to quickly repay the six-figure obligation. One of Triways’s advances carried an estimated annual percentage rate of 2,190%, a disclosure document shows; Jauregui said he didn’t know how costly the financing would be. “I should have known better,” he said. Instead of quick repayment, he took more advances — more than 30 in roughly 2½ years — first to smooth over financial bumps while he waited for a tax refund check, and then to fund the Navy job. New MCA offers arrived nearly every day. “It’s addictive because it’s easy to get,” Jauregui said. It solves the problem right away. “Then, at the back end, it gets worse.”
As MCA funders drained Triways’s bank accounts, Jauregui and his wife, Jackie Jauregui, juggled bills, worked harder and hoped the business would grow fast enough to turn the corner. The couple agonized about leaving employees empty-handed. “Mrs. Jackie the check did not go through,” a Triways customer service representative texted in August. “Zelle is preferred because I don’t want to risk another check bouncing.”
The cascade deepened through 2024 and 2025. In July 2024, Jauregui was still waiting for a federal tax refund for businesses that suffered from Covid-19 shutdowns; checks from the program were delayed by months for hundreds of thousands of firms. While waiting for the promised tax refund check, Jauregui turned to MCAs again and again. He said a broker persuaded him to take a new cash advance to help pay off his existing MCA obligations, and Triways ended up worse off — still owing on the other advances as well as the new one. That fall, Triways began deliveries for the Navy, yet the daily withdrawals by MCA funders left little cash for expenses and the added costs of the new business. Triways started missing rent payments in December. When the tax refund checks finally arrived in April 2025, Jauregui used all the money to pay down the company’s MCA obligations and still owed $300,000 to $400,000; back rent totaled roughly $1 million by June.
In September 2025, revenue from a big customer fell by roughly half for eight months. Triways took out four MCAs that obligated the company to pay an estimated total of $771,500 in exchange for roughly $470,000; about $64,000 of that went to pay off an earlier advance. Jauregui met with a bankruptcy attorney for advice that fall. In an October letter to the landlord, a small-business lender and four MCA funders, a lawyer said Triways owed the funders more than $700,000 and had net operating income of about $120,000 after rent. The lawyer proposed a repayment plan, warning that funders might collect only a third of what was owed if Triways ceased operations, and advised Jauregui to file for bankruptcy liquidation if the funders wouldn’t agree to reduced payments. “I thought I could still pull it through,” Jauregui said. Weeks later, Triways’s bank closed its accounts.
The advances kept coming. On a single day in November 2025, Jauregui took out two MCAs; one deal obligated Triways to pay an estimated $674,550 in exchange for $427,500, according to financing documents. Most of the funds went to pay off three earlier MCAs and a small-business loan; Triways kept $5,815.60 for operating expenses. It took out another MCA 10 days later, four more over eight days in January 2026, and additional advances in February and March, most for less than $50,000. “That’s how desperate I was to make the payroll,” Jauregui said. The landlord filed eviction papers in February. Jauregui closed some company bank accounts in March, trying to keep what little cash he had left from funders’ withdrawals, and said he quickly learned the move afforded no protection.
When businesses fall behind, MCA funders often file Uniform Commercial Code lien notices that ask customers owing money to a business in default to pay the funders instead. The liens can also capture funds directly from credit-card processors and payment platforms such as DoorDash and Stripe. Feast Kitchens, a small Triways customer, was told to “kindly place a hold on any funds” owed Triways and direct them to a law firm holding them on behalf of Horizon Capital NY, according to a notice reviewed by the Journal. Triways owed Horizon roughly $280,000. A second lien notice, from a different attorney, said Triways owed Square Funding Cali roughly $379,000. A lawyer for Square Funding Cali declined to comment; the lawyer said Square Funding Cali isn’t related to Block, which operates the Square payment platform.
In April this year, Triways filed for Chapter 11 bankruptcy reorganization, citing MCA payments of $250,000 a month and the financial strain created by the UCC filings to its customers. The company said it had $2.1 million in assets and nearly $6.8 million in liabilities, including more than $1.2 million owed to MCA funders. A federal bankruptcy judge dismissed the case in June after the bankruptcy trustee reported that the company had missed payroll after the bankruptcy filing and didn’t have workers’ compensation insurance, a violation of California state law, court records show. In August, Jauregui’s wife emailed Horizon asking it to release its lien of roughly $280,000 and re-establish a monthly payment plan. “This request is not an attempt to avoid our obligations. It is exactly the opposite,” she wrote. “If the company’s final source of revenue is eliminated, everyone loses.” A Horizon lawyer responded: “Can we refrain from sending these lengthy emails and just discuss the economics,” adding that “Horizon needs a number that Triways will turn over and is willing to pay weekly.” A lawyer representing Horizon declined to comment, citing pending litigation.
Triways ceased operations in September. “I tried to keep the business alive for as long as I could,” Jauregui said. Since last week, two MCA funders have asked a New York state court to enter default judgments of more than $585,000 against Triways, and a third funder asked the court to confirm a roughly $415,000 arbitration award. In the span of around two hours Wednesday, Jauregui received a half dozen different funding offers via text. “You may qualify for up to 200k,” one said.
Bankruptcy attorneys say the industry’s economics explain its persistence. Because funders’ charges are so high, they need only 30% to 40% of their contracts to pay off in full to be profitable, said Shane Heskin, a New York attorney representing Triways. The goal, he said, is to “cut off your cash flow so you have no choice but to borrow, rob and steal to pay them off, whether it’s take out a home-equity loan, sell property, selling assets, taking out another MCA.” Richard Cook, a Wilmington, N.C., bankruptcy attorney, said MCA funders, unlike conventional lenders that try to work out repayment plans to keep companies afloat, “don’t care whether the business makes it or not.” Caryl Delano, a federal bankruptcy judge in Tampa, said recently: “Virtually every small-business case we see has at least one and sometimes several or more MCA funders.”
Steve Denis, executive director of the Small Business Finance Association, which estimated the MCA market at roughly $20 billion, represents members offering various financing products, including MCAs. Alternatives to traditional financing are important for businesses turned away by other lenders that need timely access to cash, he said. He said group members were “committed to making sure that businesses are successful and survive using the financing tools our members offer,” while acknowledging the presence of “predatory companies that are just trying to get their money and don’t care if the business ultimately survives.” The trade group, he said, was working to eliminate abusive practices and “prevent bad actors from continuing to operate.” Lawmakers in a dozen states have passed laws on merchant cash advances; California, Vermont and New York require disclosures on estimated annual percentage rates, and California requires MCA brokers and funders to be licensed as finance providers. Some bankruptcy judges have concluded the transactions are loans. Last year, New York Attorney General Letitia James secured a $1 billion settlement with Yellowstone Capital over allegations that it issued MCAs that were, in fact, illegal high-interest loans in disguise; Yellowstone neither admitted nor denied guilt in the settlement.