Merchant Cash Advances: Long Beach Studio Debt Triples After Brief Cash Infusion

Small business financing has shifted toward alternative lenders as traditional bank approval rates remain low. This shift is placing increased financial strain on struggling operators who rely on quick capital.

Michael Mosselli and Marty Meier owned Brushstrokes + Beverages, a Long Beach paint and drink studio that operated for ten years before closing in July. Facing a revenue drop of more than half in early 2026, the owners sought immediate funding to cover expenses.

In February, they received a merchant cash advance of $7,200 from Woodmere Capital, a New York-based finance company. A few weeks later, they secured an additional advance, bringing the total received to $11,850. The contract with Woodmere specified daily withdrawals from their business bank accounts to repay the principal and fees.

The initial agreement required daily payments of $300, which later increased to $405. Woodmere projected the debt would be settled within two months. However, the owners missed payments by late March. They stopped authorizing automatic withdrawals and notified the company via email. Two days later, Woodmere texted that it was "Aggressive on collecting" and planned to freeze and garnish their assets.

Meier and Mosselli did not request a recalculation of the payment amount, a process the company called reconciliation. They cited shock at the collections strategy and continued to struggle with rent. By July, they closed the studio. They estimated they had repaid $6,400 but still owed more than $34,000, nearly three times the original advance.

Bankruptcy attorneys report a sharp increase in cases involving merchant cash advances. Stella Havkin, a California attorney, said that in 2018, about 5% of her small-business bankruptcy clients had used such financing. By 2026, that figure had risen to at least 70%. David Chase, vice president of the Small Business Majority, noted that these advances often worsen the financial position of businesses that are already at a disadvantage.

The merchant cash advance market grew from $8.6 billion in 2014 to an estimated double that amount by 2019. Analysts project the market could reach $35 billion by 2030. A California law signed in 2025 requires these companies to be licensed, but the new rule does not change the specific terms of existing contracts. Federal Reserve data shows that while 40% of business owners applying for government-backed loans were denied in 2025, only 10% were denied a merchant cash advance.