While the Coronavirus (COVID-19) was disrupting everyone’s lives, Palmer Lehman Sandberg worked to achieve a balance – continuing to take care of our clients’ legal needs, while protecting our clients, our employees, and our community (local and nationwide).

As Texas has begun to reopen, Palmer Lehman Sandberg has adjusted accordingly.

  • We are available for in-office meetings, with the following protections in place – while in our building and our office common areas (lobby, elevators, hallways, etc.), visitors must wear face coverings, and maintain social distancing (minimum 6’) as much as possible.
  • We continue telephone and video conferencing in place of face-to-face meetings, for those who prefer it.

As we continue to serve you, we wish everyone safety and good health as together we move forward through these uncertain times.

Please reach out to anyone at our firm via email or phone with any questions or concerns.

Email us
Star

Providing Solutions

Predatory lenders are not worth the risk

| Sep 16, 2020 | Business Law And Litigation |

Owning a small business could lead to financial independence if the enterprise proves successful. Unfortunately, many small businesses in Texas may find themselves suffering from decreased revenues. As a result, these small businesses could become targets of predatory lenders. The federal government has taken note and also taken action. Lenders offering small business owners high-interest loans may find federal authorities intervening.

Government entities filed lawsuits against lenders, and these high-profile cases might lead some companies to rethink their approach to lending. Both the Securities Exchange Commission and the Federal Trade Commission filed lawsuits against lenders recently. One firm also faces a suit from New York’s attorney general. The FBI launched a raid on one lender, revealing how serious certain allegations can be.

One report suggests a lender threatened to seek out the borrower’s clients and ask them for direct payments. Tactics such as these would not be legal under U.S. law. Another report may prove shocking to those who review it. Allegedly, one lender threatened violence against a borrower due to the non-payment of debt obligations. With stories like these surfacing, it does not surprise some that the word “gangster” is used to describe some lenders.

How do small business owners find themselves involved with such lenders?

The lenders operate under the category of “merchant cash advance” companies. The lenders provide what appears to be cash lifelines to businesses needing money. Of course, the cash advances come with high amounts of interest. Small businesses that continue to borrow from the lenders may find their debt balance grows exponentially. Small business disputes might arise over disagreements over debt obligations.

Merchant cash advance lenders are not banks, though. Therefore, they do not fall under the same regulatory requirement. Still, there are rules in place regarding the operation of such enterprises. Violations of the law can lead to civil or criminal actions.

FindLaw Network