How can I get repaid for money that I lent to a friend for their business?
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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
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 10 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.
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