Tuesday, October 13, 2009

Free Legal Advice about Merchant Cash Advances

There is a website offering free legal help and advice called “Avvo.Com” (short for avvocato, lawyer in Italian). In addition to helping you find a lawyer based on specific criteria, this site also offers a place for people to ask legal questions which are fielded by the many lawyers who participate with Avvo.

Recently, someone asked a pertinent question about how Merchant Cash Advances might play-out for a business facing a looming bankruptcy. You can see the whole thread here.

The merchant stated he was facing a bankruptcy in 2 months, and wondered if a Merchant Cash Advance might be a good way to “pay off some of my secured debt that will not get expunged” by the bankruptcy.

At the time of this writing, four lawyers from Avvo had responded to the question, and all of them concurred: to consider a Merchant Cash Advance as a solution in this instance would most likely constitute fraud and would not help this merchant at all.

The lawyers continue their warnings that if the merchant were to pursue this effort, he would open himself to potential federal criminal charges – which would be charges placed on top of the bankruptcy he already faces.

One lawyer summed it up succinctly: “In short, don't do it…play within the rules.”

Staying On Top of a Moving Industry
The reason we are noting this exchange is not as an endorsement of the Avvo site, its content, or its authors/contributors. Indeed, we expressly disclaim any opinion about the thoughts, opinions and other content of the Avvo site and we will not be monitoring it on an ongoing basis. It may from time to time publish content with which we strongly agree or disagree, and we will not be commenting on it either way on a regular basis.

We note this exchange only as a reminder to all business owners to continue due diligence before making a decision. This is especially important when the business is considering financial decisions.

We have watched the Merchant Cash Advance industry grow at an amazing rate since 1998. Now, perhaps more than ever before, it is imperative that a business owner take the time to research and understand all they can about this working capital solution and the various providers who offer them. Education becomes power.

The exchange on Avvo.com illustrates that if a business makes a bad choice regarding a Merchant Cash Advance, it could have very negative effects. The exchange also underscores the value of legal counsel in financial decisions – but we do warn that you never substitute using the services of an attorney or legal counsel with using the opinions found on any online resource.

Make Sure You’re Covered
It is important to remember that a Merchant Cash Advance will not be the same for every business in every situation – exactly the opposite is true. A Merchant Cash Advance is a unique funding product and each situation could offer special circumstances to consider.

To make sure your business is making the right decisions, proper legal counsel and guidance from trusted business advisors is a must. It might start for you with a website offering free advice, but it should not end until you have spoken directly with qualified professionals about the specifics in your situation.

Consider that some free advice about Merchant Cash Advances.

What do you think? Is there a specific incident you can share where a lawyer’s advice helped you to make better business decision