This case concerns a "Revenue Purchase Agreement," also known as an RPA, an alternative and arguably extreme form of financing for small businesses with very few financing options at their disposal. At bar is a Motion for Summary Judgment brought by Plaintiff, a financial services company, against defendant, a small marketing business in Las Vegas. The allegation is breach of contract. Underlying the case is an agreement whereby the plaintiff purchased defendant's future receivables approximating $60,000, for $40,000 less a prior balance and transaction fees. The prior balance was almost $14,000, and plaintiff further charged $2,000 each for an underwriting fee and an origination fee, along with a few hundred dollars for wire [*2]and UCC filing fees. Thus the total monies that plaintiff advanced to defendant was almost $22,000, expecting installment payments in return approximating $60,000. Defendant agreed to make payments of 11% of daily receipts until the almost $60,000 was paid off. As the old saying goes, this is good work, if you can get it. Defendant stopped paying plaintiff after defendant had paid almost $15,000, leaving an arrears of approximately $45,000.

Plaintiff now sues for that $45,000, along with a default fee of $11,260 and seven NSF fees aggregating to $2,300 (equating to more than $328/transaction) for a total of $59,000, along with pre-judgment and post-judgment interest. Plaintiff further moves for Summary Judgment for failure to abide by the contract, contending there is no question of fact. Defendant opposes the motion, contending that plaintiff provided no documentary evidence as required by law; that the transaction was really a loan, thus it was usurious because the calculated interest rate was in excess of the statutory caps; and that the amount due was ambiguous.

At the outset, it must be noted that although there is no nexus to Erie County, the RPA at issue—a boilerplate form drafted by plaintiff— stipulates that jurisdiction for any lawsuit shall be in any New York State Supreme Court in New York State. Thus, plaintiff filed the matter at bar in Erie County. There has been no objection.

Both plaintiff and defendant agree that it is well settled in New York that in order to obtain summary judgment, the moving party must make a prima facie showing of entitlement to judgment as a matter of law (Zuckerman v. New York, 49 NY2d 557 [1980]). Furthermore, where there is no issue of triable fact, summary judgment is granted as a matter of law. For plaintiff to establish a prima facie showing of entitlement in a breach of contract, a plaintiff must show that the defendant breached a binding agreement between the parties which damaged the plaintiff (Stonehill Capital Management LLC v. Bank of the W, 28 NY3d 439[2016]).

Furthermore, according to Zuckerman (supra), once a moving party has made prima facie a showing of entitlement to summary judgment as a matter of law, the non-moving party must "demonstrate by admissible evidence the existence of a factual issue requiring a trial of the action."

At bar, there is no showing of any relevant question of fact requiring a trial. Defendants do not dispute that they entered into the agreement. The eight-page agreement is submitted by plaintiff as exhibit A. The defendants do not dispute that plaintiff performed its obligations. The defendants also do not dispute that they ceased making remittances to plaintiff pursuant to the agreement.

Accordingly, plaintiff has met the burden of proof. Plaintiff has established the existence of a binding agreement and established performance under the agreement, until defendant's non-performance. Both parties acknowledge that the weekly payments stopped before the balance was paid off. Defendant has provided no allegations raising an issue of fact necessitating a trial.

Next, the eight-page agreement explicitly emphasizes in several sections that the transaction is not a "loan" which would bring with it the applicability of usury laws, amongst other things. Defendant makes the allegation that the transaction was indeed a loan, and therefore because the calculated annual interest rate of 1898% exceeds the civil cap of 16% and the criminal cap of 25% (PL 190.40; see also Adar Bays LLC v. Genesys Id, Inc., 37 NY3d 320 [2021]), it is usurious and thus illegal. There is no real calculation as to how this 1898% is derived, but that is inconsequential as to the determination as to whether the transaction is a loan or not.

Whether a financial agreement is a loan or a financial transaction with a security interest [*3]is determined in New York by a 3-factor test: (1) whether there is a reconciliation (I.e. adjustment) provision; (2) whether the agreement has an indefinite term; and (3) whether the plaintiff has any recourse should the merchant declare bankruptcy (Principis Capital, LLC V. I Do, Inc. at al., 201 AD3d 752 [2d Dept. 2022]; LG Funding, LLC V United Senior Properties of Olathe, LLC at al., 181 AD3d 664 [2d Dept. 2020]; K9 BYTES, Inc. et al. v. Arch Capital Funding, LLC et al., 6 Misc 3d 807 [2017]).

Applying this law to the facts at bar, it is evident that all 3 prongs are satisfied. First, the agreement does not contain any fixed term. It is set in a way to continue until such time as the merchant defendant has generated enough receivables to remit the entirety of the purchased amount to the plaintiff, however long that may take, and as such was not subject to any finite term period. As plaintiff rightly notes, if there is no revenue, no payment is due.

Second, plaintiff had no recourse under the agreement in the case of a bankruptcy (see section 2.9). In other words, the aforementioned cases have illustrated that the risk in a loan is typically shouldered by the borrower, in contradistinction to an RPA, where the risk is typically shouldered by the lender. Here, in the event of a bankruptcy, plaintiff lender has no recourse.

Finally, the most salient issue at bar is whether there is a reconciliation provision. If there is not, then the transaction is finite and considered a loan, thus subject to usury laws amongst other restrictions.A review of the agreement reveals a reconciliation provision at section 1.4 called "Adjustments to the Remittance." The procedure is laid out in two paragraphs, and plainly is very one-sided in its restrictions, thus tilting in favor of the lender. However, the caselaw cited above requires merely a reconciliation provision, not that it be equitable or even fair. In fact, RPAs are known for their predatory character precisely because so much downside risk is born by the lender.

Moreover, it must be noted that the merchant at bar never even requested a reconciliation or adjustment to the remittances. He simply stopped making the payments after $14,000 had been paid, leaving a significant balance. In sum, the arrangement at bar did not qualify as a loan, thus it could not by definition be usurious.

Finally, defendants contend that an issue of fact exists because the amount owed is ambiguous. This falls flat on its face. Plaintiff has in fact alleged specific amounts due and owing since defendants stopped making payments. The only ambiguity as to arrears is the calculation of interest, whether pre-judgment or post judgment, and that practically not be calculated until the judgment is rendered. Defendants contend that they did not breach the contract, but rather, because they had no income stream, they could simply not make payments under the agreement, thus they did not breach the agreement. While this might seem an arguable defense, defendants have provided no evidence or support to back up the claim. Under the established rules concerning summary judgment recited supra, the burden shifted to defendants to reveal any issue of fact. Defendants have tendered no evidence whatsoever to establish an issue of fact, ie that they did not breach the agreement by not have a sufficient income stream. At bar there are no bank statements, profit and loss statements, balance sheets, cash flow reports, or any other financial documentation to substantiate a claim that the payments were not tendered because of a lack of revenue, in contrast to payments not being tendered for any other reason, which would constitute a breach of the agreement. Accordingly, defendants final claim is unavailing.

In conclusion, there are no questions of fact to justify a denial of plaintiff's motion for summary judgment. The financial arrangement may have been extreme or even arguably [*4]predatory, however pursuant to law, plaintiff has shown defendant to have breached a legally binding contract.

Plaintiff's motion for summary judgment is therefore granted.

Plaintiff is directed to order the August 15, 2025 transcript, attach it to the proposed Order, and submit it to the Court on notice to opposing counsel within 30 days.