LENDINI WELCOMES SOLE-PROPRIETORS WHEN OTHERS DO NOT

By June 9, 2015Uncategorized

As the Merchant Cash Advance industry grows, more and more sole-proprietors are turning to business cash advances to secure working capital.  Sole-proprietors present unique challenges to advance providers because such businesses are very different from businesses organized as corporations, partnerships, and limited liability companies (LLC’s).  A Merchant Cash Advance is designed as a business-to-business (B2B) transaction.  An advance provider such as Lendini purchases future receivables from a business for an immediate cash price.  Its return on the investment is the difference between the amount of the advance and the value of the receivables purchased. 

No matter how small a business might be, if it is organized as a corporation, partnership or LLC, the states and the federal government recognize that business as a separate entity from its owners.  This protects the owner from losing his personal assets if the business sustains a loss – the so-called “corporate veil”.  It also means that a different set of laws apply to the transaction.  Businesses do not benefit from consumer protection laws, are often exempt from usury statutes and are considered by most courts to have a greater sophistication than a consumer would when entering into a contract. 

Sole-Proprietorships, though, are generally not considered to be separate from their owners.  In fact, many states do not even have a means to register them as a business at all.  And while a few states look to the purpose of an advance to determine whether a merchant is an individual or a business, most do not.  When they do not, an advance provider faces significant challenges because, again, the product is designed for commercial, rather than consumer, use. 

Unlike many merchant cash advance providers, Lendini welcomes sole-proprietorships.  Lendini adjusts it underwriting and the parameters of the advance it offers to conform with state consumer protection laws.  While the product is not a loan, Lendini takes care to offer advances to sole-proprietors on term that would pass muster if a court or regulator were to treat the purchase as a credit transaction. 

In conclusion, you do not need to be incorporated to do business with Lendini.  You simply need to be “in business.”  So to those small business men and women who do not qualify for a bank loan and who may not get a merchant cash advance because they are not incorporated, I say look no further.  Lendini is the best match for you.

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