[Christian]

Alex -- that is great (and correct) legal background on difference between loans and cash advances. However, in the high risk space (really the only place you see full COJs up front), advances really are a lot closer to loans than advances (ever tried to get a true up on an ACH contract with one of those firms?). Two clear reasons I'd recommend brokers advise any client NOT to sign one -- and I'll even put the ethics of the practice and the fact the are unenforceable in many jurisdictions (and therefore just a scare tactic) aside for a moment.

1. You are right, cash advance should only be about contractual performance, not business performance -- however, if you read the "default" clauses of the YSCs of the space (the companies that are actually doing full COJs up front), it is so broad that PG of performance is effectively a PG -- for example, 2 missed payments and now you are "in default" and the PG of performance becomes a true PG -- and the full amount is due regardless of business performance, and they can try to enforce the COJ.
2. As Michael I said, the COJ is a clear intent to circumvent the first position who will usually have a UCC on the business and the first "right" to those receivables. I'm not convinced it should even be legal (even putting the ethics of a full COJ up front and the legality of stacking aside) to sign a second+ position COJ because they don't have the first right to those receivables.

The COJ that Everest uses seems to actually be pretty reasonable in terms of scope.