Long Beach Studio Owners Face $34,000 Debt After Taking Merchant Cash Advances

Michael Mosselli and Marty Meier closed their Long Beach paint-and-sip studio in July 2026 after accumulating more than $34,000 in debt. The owners had borrowed a total of $11,850 from Woodmere Capital, a New York-based finance company, using two separate merchant cash advances taken in February 2026. The first advance was for $7,200, with a second amount secured weeks later.

The repayment structure required daily withdrawals of more than $300 from the studio’s business account. Woodmere Capital estimated the debt would be cleared within two months. However, Mosselli and Meier reported that their revenue dropped by more than half as grocery and gas prices rose. By the end of March, the owners could no longer sustain the daily payments. They stopped authorizing automatic withdrawals and emailed the finance company to notify them of the change.

According to text messages shared with The Los Angeles Times, Woodmere Capital responded two days after the payments stopped. The company stated it was “Aggressive on collecting” and listed actions including freezing assets, garnishing accounts, and using a private investigator to pursue financial wrongdoings. Meier replied that sales had declined and that the current repayment schedule did not match the business’s actual income. The company then asked what amount the owners could pay daily instead. Mosselli and Meier said they were shocked by the exchange and did not respond further.

Merchant cash advances, or MCAs, are a form of financing where a business receives a lump sum of cash in exchange for a percentage of future sales. Unlike traditional bank loans, MCAs are largely unregulated and often lack interest rate caps. A Federal Reserve survey of small businesses with employees found that 4 in 10 owners who applied for a government-backed loan in 2025 were denied, while only 1 in 10 were denied an MCA. The share of financing applications for MCAs rose from 8% to 12% between 2023 and 2025.

California lawmakers have moved to regulate the industry. A bill signed into law last month requires MCA companies to be licensed, though this does not retroactively change terms for existing contracts. A 2018 law mandates that issuers disclose the total cost of financing, and a 2023 law prohibits certain processing fees. The contract Mosselli and Meier signed with Woodmere Capital listed a 32% daily interest rate. The document clarified that the money received was not a loan but a purchase of future receivables.

Stella Havkin, a California attorney who represents small businesses in bankruptcy, said cases involving MCAs have increased sharply. She estimated that in 2018, 5% of her cases included an MCA, whereas at least 70% of cases now include one. John-Patrick M. Fritz, a partner at an L.A.-based law firm, noted that MCAs often accelerate financial failure for businesses that are already struggling. He said the debt makes the situation worse rather than resolving the underlying revenue problem.

Woodmere Capital registered as a business in New York in 2024. State records show the company is registered to Joseph Wallin, and its listed address in Nassau County is a single-family home. Justin Miller, who identified himself as head of operations at Woodmere, said the terms were flexible and compared the product to a mortgage or credit card. He stated that businesses struggling with payments could request a reconciliation, where the company recalculates the daily amount based on recent sales. Miller said the product is not predatory simply because it purchases receivables.

Mosselli and Meier estimate they have paid back roughly $6,400 of the nearly $12,000 they received. They still owe about three times that amount. Liens have been placed on several of their accounts, including PayPal and Groupon, cutting off additional revenue streams. The owners acknowledged they may not have fully understood the agreement when they signed it but said they felt they had no other option to keep the business running.