When the funder comes after the owner personally
What you actually guaranteed
Almost every merchant cash advance comes with a personal guaranty from the owner. Funders often sue owners as if they promised to repay the whole advance. Many MCA guaranties say something narrower: the owner guarantees that the business will perform certain promises, such as not diverting receivables or changing bank accounts. If the business simply lost sales and could not pay, that may not be a breach the guaranty covers.
Defenses we look for
- A performance guaranty, not a payment guaranty. The wording decides what the owner owes.
- No underlying obligation. If the advance is really a usurious loan and void, there may be nothing left to guarantee. See MCA lawsuit defense.
- Signature and writing problems. A promise to answer for another's debt must be in writing (General Obligations Law § 5-701(a)(2)). Signature blocks naming the wrong person or entity are more common than you might expect.
- Changes without consent. When the funder and the business change the deal, the guarantor may not be bound by terms they never agreed to.
- Confessions of judgment against the owner. These can often be challenged the same way. See confessions of judgment.
Protecting your household
Owners worry about personal accounts and their homes. We look at exemptions, the timing of enforcement, and whether a negotiated resolution or bankruptcy makes sense for the owner personally.
Frequently asked questions
Am I personally liable for my business's merchant cash advance?
It depends on the guaranty you signed. Many MCA guaranties cover specific promises by the business rather than repayment of the whole advance.
Can the funder go after my personal bank account?
Only if it has a judgment against you personally. If it does, we review whether that judgment can be vacated and what exemptions apply.