Mike Lindell, the unhinged loudmouth spokesman/founder of MyPillow, is back in the headlines—and not for any of his usual election conspiracy theories. This time, he’s suing several merchant cash advance (MCA) companies, accusing them of what he describes as “loan-sharking” practices. Lindell, whose recent financial woes stem from his own high-profile legal troubles, is now tangled up in what he claims is a predatory lending scheme. And while we’re not here to give Lindell a free pass, his experience does underscore some harsh truths about the MCA world that small business owners need to know.
The Players: Lifetime Funding, CapSpot, FunderZ
Lindell’s lawsuit doesn’t just target MCA company Lifetime Funding; it also points fingers at two other companies: CapSpot and FunderZ. Let’s break down their roles in what Lindell is calling an “unconscionable” scheme.
1. CapSpot: Think of CapSpot as the eager broker who just can’t wait to introduce you to the “perfect” funding solution. According to Lindell, CapSpot pitched this deal to him, promising a real estate loan that never materialized. Instead, CapSpot handed Lindell over to Lifetime Funding for a pricey MCA, under less-than-transparent terms. If Lindell’s accusations are true, CapSpot played the role of bait in this bait-and-switch scheme. I’m not going to sympathize too much with a loon like Lindell, but what he describes as the bait-and-switch is sounds plausible to me. Everyone in the industry has heard of the carrot of the “cheap long-term loan” being dangled to desperate merchants if they would just get on board with this expensive MCA.
2. FunderZ: It’s hard to tell exactly what FunderZ role here is based on Lindell’s complaint. He claims that they are “an entity allegedly involved and being paid by Lifetime to manage ACH withdrawals, reporting, and deal tracking, but in reality just another merchant cash advance company in cahoots with Lifetime.” My guess would be that FunderZ put some of the funds into the $600,000 deal hoping to profit off of the sky-high fees associated with it. In the MCA space, deals are often funded via “syndication” wherein multiple MCA companies pool capital together and receive their pro rata share of the repayments.
The Deal Breakdown: Where Lindell Got Pinched
Here’s what Lindell signed up for (or, in his words, got strong-armed into):
• Amount Advanced: $600,000
• Total Repayment Obligation: $840,000
• Daily Payment: $16,800
• Fees: $36,035
Helpfully, the linked article to the The Independent whom Lindell spoke to has this snippet from Lindell’s contract with Lifetime.
It does not appear to be stated in Lindell’s contract but simple arithmetic indicates a rate factor of 1.40 ($840,000 purchased amount divided by $600,000 purchase price)–even though Lindell only netted $563,965 after fees.
What The Heck Is Specified Percentage And Where Is The Term Length?
One of the classic sleights of hand in the merchant cash advance (MCA) world is the so-called “specified percentage” of daily sales. In theory, this percentage should make MCAs more flexible than traditional loans—payments adjust with actual sales, so if business is slow, the amount you owe that day should be lower. But here’s the catch: many MCAs, including the one Lindell took on, set a fixed daily debit amount instead. The specified percentage exists on paper, but in practice, merchants are hit with a set daily payment regardless of revenue fluctuations. In theory, the merchant or MCA could “reconcile” the fixed daily payments with the actual specified percentage of sales, adjusting future payments to match real-time revenue. But let’s be real: very few merchants actually go through this reconciliation process, and MCAs certainly aren’t offering it proactively—it’s extra work they’d rather avoid. Lindell’s lawsuit even indicates that Lifetime should have a reconciliation process but has no dedicated department for it.
Adding to the MCA’s claim that this isn’t a loan is the notable absence of any specific maturity date in Lindell’s contract. Without a fixed term, the MCA can argue that the product lacks the predictability of a loan. However, if we crunch the numbers on Lindell’s deal, dividing the total repayment of $840,000 by the daily installment of $16,800, we get a term length of 50 business days—or roughly 2.5 months if we assume daily withdrawals happen Monday through Friday. While this implied term is short, the lack of an official maturity date serves to blur the lines, helping the MCA maintain the illusion that this product is purely a cash advance, not a loan. Lindell’s lawsuit even calls out Lifetime for having a “phony reconciliation department” that exists in name only, further underlining how the “specified percentage” and lack of a term length are used to disguise what is effectively a very expensive loan under the guise of a flexible cash advance.
What Small Business Owners Should Learn from This
While Lindell’s legal troubles may be of his own making, there are some solid lessons to be learned here. For any business owner considering an MCA, Lindell’s experience highlights some of the risks involved.
• Avoid Brokers Like CapSpot: Don’t let a broker’s smooth pitch push you into a deal you don’t fully understand. Brokers add layers of fees and complexity, often without adding any real value. They’ll also dangle fantastical tales of affordable loans you can roll into if you’d just get on board with their eye-wateringly expensive MCA. Don’t believe those for a minute.
• Know the True Cost: MCA terms can be designed to overwhelm you with fees, daily payments, and inflated payback amounts. Make sure you understand the full cost before committing. Lindell’s lawsuit alleges that Lifetime’s MCA equates to an interest rate of 441%.
The Takeaway
Yes, Lindell’s lawsuit has all the makings of a messy court drama, but it’s also a valuable cautionary tale. MCAs thrive on middlemen, high fees, and brokers who will say anything you want to hear to pocket commissions. At BrokerFreeCapital, we believe in cutting through that noise to offer straightforward, transparent funding options. Lindell’s experience is a reminder that if a deal looks like a rip-off, it probably is.
At the same time, I’m extremely confident, given Lindell’s financial position and well-documented legal issues that no reputable online lender that you’d actually want to do business would offer him funding. If you’re foolish enough to get involved in a transaction like this–hey, it’s a free country–we wish you lots of luck. But we would never recommend a “solution” like Lifetime’s deal.
Conclusion: Don’t Fall Into the MCA Trap
Lindell’s case is one of many that highlights the risks of MCAs. So if you’re considering one, know who you’re dealing with, avoid unnecessary middlemen, and always be skeptical of deals that seem too good to be true. And if you want to save yourself some serious cash and headache, do what Lindell didn’t—consider transparent options with fair terms and avoid the broker-run maze of high-cost lending.