Direct answer
No. Failing to repay a merchant cash advance is a civil matter, not a crime. You cannot be arrested or jailed for a defaulted MCA. Collectors who threaten arrest are lying, and in most states that threat is itself illegal. The real risks are civil: a judgment, frozen accounts, UCC liens, and a personal guarantee.
Why collectors say it anyway
MCA collections is largely unregulated compared with consumer debt, and some collectors use the threat of “fraud charges” or “theft of services” to force a payment. Unless you falsified bank statements or diverted receivables to a hidden account with intent to defraud, no prosecutor is interested in a defaulted advance. Document every threat: date, time, number, what was said.
What can actually happen
The funder can sue you and your business in New York, obtain a judgment, restrain your bank account, levy assets covered by its UCC-1 lien, and pursue you personally under the guarantee. It can also report the default to commercial credit bureaus. These are serious, but they are financial consequences with financial solutions: settlement, reconciliation, or in rare cases bankruptcy.
The one real exception
Intentional fraud is different from default. Providing fake bank statements to get funded, or opening a new account specifically to hide receivables after a judgment, can create criminal exposure. Struggling to pay because revenue fell is not fraud, and no amount of collector pressure changes that.
Key takeaway
Default on an MCA is a civil problem with civil remedies. Anyone threatening jail is trying to scare you into paying before you understand your options.
Cite: Zogby, “Can you go to jail for not paying a merchant cash advance?”, updated Sep 14, 2026.