Confession of Judgment (COJ)
A clause where a business owner pre-agrees to a court judgment on default, waiving the right to contest it first.
A confession of judgment, or COJ, is a contract clause in which the borrower agrees in advance that, if they default, the funder can obtain a court judgment against them without the usual chance to appear and contest it. It lets a funder move quickly to enforce, which is exactly why it is so consequential for the operator signing it.
COJs were historically common in some merchant cash advance agreements and drew significant scrutiny and regulatory attention because of how aggressively they could be used. Rules and enforceability vary by state, and many funders have moved away from them or restricted their use.
Whether or not a given agreement includes a COJ, the lesson is the same: read the enforcement and default sections, not just the pricing. Understand what a personal guarantee, a UCC-1 filing, and any confession-of-judgment language actually let a funder do before you sign. If a clause is unclear, have counsel review it.
Frequently asked
What does a confession of judgment do?
It lets a funder obtain a court judgment against you on default without the normal opportunity to contest it first, which speeds up their ability to enforce collection.
Are confessions of judgment still used?
Their use has narrowed. Enforceability varies by state and some jurisdictions restrict them, so many funders have limited or dropped COJs. Always check whether your specific agreement contains one.
Should I sign a COJ?
That is a decision to make with full understanding of the risk, ideally with counsel. At minimum, read the default and enforcement language closely and make sure you understand what you are agreeing to.
Related terms
A promise by the business owner to be personally responsible for the obligation if the business cannot pay.
A public notice a funder files with the state to record a security interest in your business assets or receivables.
A financing structure where a funder buys a set amount of your future sales at a discount today — a sale, not a loan.
The requirement that funds be used for commercial purposes, not personal or household use — central to commercial financing.
Taking new capital from your existing funder — typically around 50% paid down — that pays off the current balance and adds funds on top.
See a real offer for your business
Connect your business bank, get a decision in minutes for qualified files, and review transparent total payback before you sign. Quickie funding is a purchase of future receivables — not a consumer loan.