Q: We have a potential investor who seems to be using a bridge loan looking to invest and providing dodgy documentation.
The investment is for $350,000 but the California-based lender sent through a pre approval letter saying they have $450,000 ready for the investment and is asking to see a draft invoice before signing the investment agreement. This seems like someone is using our pitch deck to secure a personal loan elsewhere, but is this normal procedure?
Lawyers, want to be a Justia Connect Pro too? Learn more ›
- California
- (916) 704-3009
- View Profile
- Answered
A:
It's understandable that you're feeling cautious about this situation. Based on what you’ve described, it’s not typical for an investor to require a draft invoice before signing an investment agreement, especially when the loan or funds seem to come from an external source, like a bridge loan. Asking for a draft invoice could suggest they are trying to use your information to secure financing elsewhere, potentially without committing fully to your deal.
You should be careful about providing any documentation before a clear and legitimate agreement is in place. If their documentation appears dodgy or unclear, it’s reasonable to request further proof of their financial standing and intentions. Proper due diligence is crucial to ensure you're not being misled or caught in a situation that could harm your business.
It might be wise to seek legal advice to review the specifics of the deal and the investor’s background before moving forward. Taking time to investigate can help you avoid potential complications down the line.
Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.
