For business owners looking for fast financing, merchant cash advances can seem like an attractive option. Many cash advance companies lure entrepreneurs in with promises of no fixed monthly payments, no need for collateral and the willingness to look past bad credit. A good rule of thumb is if it sounds too good to be true, that’s likely the case.

Here is how some say they fell prey to the hidden costs of merchant cash advances (MCAs) that contributed to the downfall of their businesses.

Lack of regulation opens the door to exploitation.

Unlike loan companies, MCA providers aren’t bound by the same laws as lenders. That’s because MCAs aren’t loans, but instead are commercial transactions on future receivables. While the Uniform Commercial Code regulates their practices, they aren’t bound by banking laws that protect business owners. This loophole means that providers have full discretion over the fees you’ll end up paying.

Annual Percentage Rates (APRs) are sky-high.

As noted above, MCAs appear to be a good deal on the surface, until you learn about the crippling Annual Percentage Rates on your advance. These fees pale in comparison to traditional interest rates. In fact, you could end up paying anywhere from 60 to 200 percent on your advance. If your business has a drop in sales even for one month, you could end up in a vicious cycle of paying APRs.

Taking on risky financing options can stack the odds against you when it comes to making a profit. If you’ve fallen victim to a predatory cash advance scam and your business is suffering, discussing your financial situation with an attorney may be able to help you save it from going under.