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We Believe You Shouldn’t Sign a COJ Before Obtaining Funding; Here’s Why

A Confession of Judgment is a legally binding agreement between funding companies and business owners that is often used in lieu of collateral. At first glance, this agreement may seem harmless, but it certainly is not always in the best interest of the business owner.

When taking out funding, business owners are expected to sign off on many documents to fulfill requirements and enact the contract. The business finance world can be confusing, and not all business owners have a thorough understanding of all the documents they’re signing and agreeing to. Unethical funding companies will take advantage of this fact and ask the borrower to sign a Confession of Judgment [COJ] at the time of funding.

A COJ allows the funding company to circumvent the typical legal process and take a claim directly to court for resolution without the business owner even being notified of the proceedings. The agreement states that the business owner understands that they owe a certain amount of money and that they voluntarily agree to the court’s decision should a legal dispute arise. Essentially, this agreement is put in place so that the business owner cannot legally defend themselves against the funder should they get behind or miss a payment.

Logically, we would never expect our clients to sign a COJ at the time of funding because there is no need for them to confess liability before a potential misstep even has the chance to occur. Why would we expect our clients to admit guilt before they even receive their funds? Thankfully, this practice has been brought to light in recent years, and some states have banned COJs altogether.

At Elevate Funding, we have not and will not make use of COJs or other unethical practices. Every decision we make —from our approval process, to our underwriting guidelines, to the service we provide throughout the course of the advance— is made with the small business owner’s best interests in mind.

We are dedicated to working with and finding custom solutions for business owners who are struggling with their payments. With our Revenue-Based Finance product, payments are set on a fixed percentage of sales rather than a static number — this means that as sales fluctuate, payment amounts fluctuate, too.

If you need funding and wish to work with a reputable, transparent funder, we would love to hear from you! Please call us at 888-382-3945 or submit our web form, and one of our teammates will get back to you as soon as they are available.


Revenue-Based Finance is formerly and alternatively known as Merchant Cash Advance, or MCA.