Paint Studio Debt Triples

Michael Mosselli and Marty Meier, owners of a Long Beach paint and drink studio, borrowed $7,200 from a New York-based finance company in February 2026. Two weeks later, they took out a second advance. The total cash received was $11,850. By July, when they closed the shop, the debt had grown to more than $34,000.

The financing instrument is a merchant cash advance, or MCA. The product is largely unregulated and differs from a traditional loan. The contract Mosselli and Meier signed with Woodmere Capital stated the money was not a loan. In exchange for the cash, the owners agreed to daily withdrawals from their business accounts. Woodmere initially set the daily payment at $300. Later, the amount increased to $405. The company estimated the debt would be paid off in less than two months.

The owners could not maintain those payment levels. Sales at the studio dropped by more than half as grocery and gas prices rose. Mosselli described the decision to take the advance as made out of desperation. They had previously secured government-backed small business loans, but needed faster access to capital this time. A government-backed loan can take 30 to 90 days to process, while an MCA can be available in one day.

In late March, the owners stopped authorizing the automatic daily withdrawals. They emailed Woodmere to halt the payments. Two days later, they received a text message from the company. The message stated that Woodmere was aggressive on collecting. It listed actions the company would take, including freezing and garnishing assets and using a private investigator to pursue financial wrongdoings. Meier replied that sales had declined and the current repayment structure did not reflect the business reality. The company asked what amount they could pay daily instead. The owners said they were shocked by the exchange and did not text back.

The studio closed in July. Mosselli and Meier estimate they have paid back roughly $6,400 of the $11,850 they received. They still owe approximately three times the amount borrowed. Liens have been placed on several of their accounts, including PayPal and Groupon. These liens cut off access to additional revenue.

Bankruptcy attorneys report a sharp rise in cases involving these financing tools. Stella Havkin, a California attorney who represents small businesses filing for bankruptcy, said the number of cases involving MCAs has mushroomed. In 2018, she estimated that 5% of her cases involved an MCA. Now, at least 70% of cases include at least one cash advance. The businesses tend to be very small, often with no more than a few employees, and span industries from construction to apparel.

John-Patrick M. Fritz, a partner at an L.A.-based law firm that handles small-business bankruptcy, said the financing often accelerates a decline that was already occurring. He noted that the businesses taking out fast cash were usually already struggling. The MCA then makes the situation worse. Mosselli and Meier acknowledged they may not have fully understood the agreement when they signed it. They said they felt they had no other option to keep the business going.

Woodmere Capital first registered as a business in New York in 2024. State records show the company is registered to Joseph Wallin. The company's listed address in Nassau County is a single-family home. Justin Miller, who identified himself as head of Woodmere's operations, said the cash advance is no different from a mortgage or a credit card. He stated that terms are flexible and that businesses can request reconciliation to recalculate the daily payback amount based on recent sales. He said it is not predatory just because the company is purchasing receivables.

The merchant cash advance market has grown steadily. In 2014, nationwide totals were about $8.6 billion. By 2019, the market had more than doubled. Analysts predict the market could reach $35 billion by 2030. A Federal Reserve survey of small businesses found that 4 in 10 business owners who applied for a government-backed loan in 2025 were denied funding. Only 1 in 10 were denied a merchant cash advance. The percentage of applications for MCAs rose from 8% to 12% between 2023 and 2025.

California lawmakers have moved to regulate the sector. A bill signed into law last month requires merchant cash advance companies to be licensed. Previous laws in 2018 required issuers to disclose specific terms, such as the total cost of financing. A 2023 law prohibits lenders from tacking on certain fees, including fees for processing payments. The new licensing requirement would not have changed the terms of the advance Mosselli and Meier received.