[Cfairbank]

130+ Views and np comments?
I spent some time reading through old threads and this is the conclusion I came to.
If you get a judgement you all set but if the merchant decides to get an attorney, this can become an expensive proposition.
Lets say they have a 20k advance at 1.25 over 9 months. They close the business and we go at them personally. Since it's a receivables purchase and an individual really can't guarantee what the receivables of a company will be, it would really look like a loan on paper. Now that "loan" will fall into usury territory and to me it's not worth litigating. My client think this is the "next big collections market" but I think it's a risky proposition unless your just buying default judgements. Am I missing something here?

Most merchants do actually contractually default before closing their business (e.g. stopped or rejected payments). Even if they don't, many folks (mostly in the high risk space) try to collect by deeming a default with crazy terms in the contract (e.g. two missed payments). 10% collected is a benchmark used by many collection firms.

The client "guaranteed performance" of the business.

If it's a MCA not a loan, it's a guarantee of performance of the terms of the contract, not performance of the business. This means they technically just need to follow the contract, and there should be no recourse even if business fails. But pursuant to the first point, that rarely happens.