How can I get repaid for money that I lent to a friend for their business?

UPDATED: Oct 1, 2013

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How can I get repaid for money that I lent to a friend for their business?

I helped a friend start an online store/business about 12 years ago, recently in the last few years I used some of my personal credit cards to pay some of our vendors. Now the business is not doing very well and may go out of business in the next few weeks/months. I still have a balance on several credit cards that were used specifically for the business and am afraid that the business will not be able to pay these off. What recourse if any do I have? I am not an officer or owner of the business.

Asked on October 1, 2013 under Business Law, Tennessee


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

If there was a loan agreement--i.e., an agreement that the money was a loan, to be repaid, not a gift or an investment in the company--then if you are not repaid, you could sue for its return under the theory of breach of contract (breach of the loan agreement). Note that an oral or verbal agreement--that is, an unwritten one--is enforceable as a matter of law, though it can be more difficult to prove then when there is a written agreement. If the business is a limited liability company (LLC) or corporation (inc.), you can only sue the business; if it was not, however, you could sue your friend personally for the money.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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