Legal Pitfalls to Avoid in 2025 — And How Participations Can Be Your Backstop

If you’re a factor or asset-based lender, 2025 is shaping up to be a legal minefield.

Tighter enforcement and borrower disputes are already impacting how specialty lenders operate, especially those growing quickly or entering new industries. At Thirdmark Capital, we talk to lenders who nearly closed deals they would’ve regretted. Here are three emerging legal risks — and how smart participation can help you stay protected while continuing to fund with confidence.

1. Concentration Risk Meets UCC Risk

Lenders pushing limits with key borrowers often overlook lien perfection and subordination exposure. In sectors like staffing, construction, and medical, borrower defaults are up, and contested liens are growing.

2. Cross-Collateral Confusion in Multi-Entity Borrowers

More borrowers are creating “friendly” subsidiaries or shifting assets mid-term. If your documentation isn’t airtight — especially in factoring — you could end up chasing receivables you don’t control.

3. Regulatory Changes & State-Level Scrutiny

States like California and New York are increasing disclosure requirements, especially around non-bank lending. Even seasoned lenders are finding their internal legal teams stretched thin.

Participation Solution

States like California and New York are increasing disclosure requirements, especially around non-bank lending. Even seasoned lenders are finding their internal legal teams stretched thin.

Why Legal-Smart Capital Matters Now More Than Ever

We don’t just bring capital, we bring clarity. At Thirdmark, our participations are structured with the same legal rigor you expect from an in-house team. We move fast, stay silent, and respect your credit and legal processes.

Get In Touch

We’ll help you stay ahead of the legal curve and keep funding confidently. Get in touch with our team to discuss how participations can reduce your legal exposure, without slowing down your deals.

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