“As a musician, you have bills,” he says. My royalty checks “only get paid quarterly, so sometimes that money runs out.”

Rap, Hip-Hop

Initially, Sound Royalties sought deals tied to pop, rock and country, the most durable genres for producing royalty income, and bigger names, according to three people familiar with the firm. Clients like Larry Weiss, who wrote Glen Campbell’s “Rhinestone Cowboy” and Stephen Marley, a Grammy award-winner and son of Bob Marley, UCC financing statements filed with state regulators show. Now, a large number of clients are in rap and hip-hop, like Ace Hood and Bizzy Crook, the UCC filings show.

Marley, Ace Hood and Bizzy Crook -- whose real names are Antoine McColister and Lazaro Camejo -- didn’t respond to requests for comment.

Weiss says he was “a little careless” in not reviewing the contracts more closely. After taking multiple cash advances, Sound Royalties was soon collecting all his royalty income. Weiss also wound up getting hit with a bigger tax bill than he anticipated.

The firm “didn’t really go into how the structure worked” verbally, he says, referring to how much the financing would actually cost.

Another example shows how costly it can be. Sean Garrett, whose real name is Garrett Hamler, produced and wrote a number of chart-topping hits in the 2000s. Last August, Sound Royalties agreed to advance him $44,852, minus a 10 percent fee, a copy of the contract the firm filed as part of a lawsuit against him showed. It would collect $74,174 over three years, its estimate of what Hamler would earn, with repayment front-loaded into the first year.

Cost of Financing

The overall cost of the financing, in percentage terms, appears nowhere in the 11-page document. Based on a basic interest rate calculator, it comes out to about 28 percent per year. However, the effective APR rises as high as 34 percent because the bulk of the repayment occurs early in the contract term. Depending on how it’s calculated, the cost could be upwards of 50 percent, one industry insider says. (The contract was subsequently amended after it was signed.) Hamler’s attorney, Frederick Dawkins, says his client didn’t want to comment and that Sound Royalties voluntarily dropped its complaint.

These contracts allow “songwriters or artists to get some cash when virtually no one else will give it you,” Crownover says. However, “the negatives are that the rates in some states could be usury if you do the math on it.”