Repayment & Terms

Different products have different payment structures. Understanding them is crucial:

Daily Payments Used by: MCAs, some working capital loans

How it works:

• ●Fixed or percentage of daily sales
• ●Debited via ACH every business day
• ●Higher frequency = tighter cash flow management

Pros:

• ●Payments flex with sales (MCA)
• ●Pay off faster
• ●Less interest overall (for loans)

Cons:

• ●Daily cash flow impact
• ●Must maintain bank balance
• ●Can feel relentless

Weekly Payments Used by: Some term loans, working capital

How it works:

• ●Fixed payment every week
• ●Usually debited Monday or Friday
• ●Common for alternative lenders

Pros:

• ●More manageable than daily
• ●Pays off faster than monthly
• ●Less total interest

Cons:

• ●Still frequent cash management
• ●May not align with revenue timing

Monthly Payments Used by: Bank loans, SBA, some equipment financing

How it works:

• ●Fixed payment once per month
• ●Usually same date each month
• ●Most common for traditional lending

Pros:

• ●Easiest to budget
• ●Aligns with other monthly expenses
• ●Standard business accounting

Cons:

• ●Larger individual payments
• ●May be harder to make big payment

Revenue-Based Payments Used by: Revenue-based financing

How it works:

• ●Percentage of monthly revenue
• ●Automatically adjusts with sales
• ●Usually weekly or monthly debit

Pros:

• ●Built-in flexibility
• ●Lower when sales are down
• ●No fixed payment pressure

Cons:

• ●Unpredictable payoff timeline
• ●Can be expensive over time

Missing payments has consequences. Here's what to expect:

Immediate Consequences:

First Missed Payment:

• ●Late fee (typically 5% or $25-50)
• ●Lender contact (calls, emails)
• ●NSF fee if ACH fails
• ●Payment reattempted

Multiple Missed Payments:

• ●Default interest rate may apply
• ●More aggressive collection
• ●Potential acceleration of loan
• ●Credit reporting (after 30+ days)

By Product Type:

MCA:

• ●Daily ACH continues to attempt
• ●Multiple NSF fees possible
• ●May trigger default clause
• ●UCC lien enforcement possible
• ●Personal guarantee pursued

Term Loan:

• ●Late fees accumulate
• ●Default interest kicks in
• ●Reported to credit bureaus
• ●Loan may be accelerated (full amount due)
• ●Collateral at risk

Line of Credit:

• ●Late fees
• ●Line may be frozen
• ●Interest continues accruing
• ●May become term loan (no more draws)

Legal Consequences:

• ●UCC filing allows asset seizure
• ●Confession of judgment (if in contract)
• ●Personal guarantee enforced
• ●Potential lawsuit

What to Do BEFORE You Miss:

1. ●

   Communicate Early Contact lender BEFORE you miss. Many will work with you.

2. ●

   Request Modification Options may include:

• ●Payment deferral
• ●Reduced payment temporarily
• ●Extended term
• ●Interest-only period

1. ●Explore Options

• ●Refinance to lower payment
• ●Consolidate multiple debts
• ●Negotiate settlement (last resort)

Protecting Yourself:

• ●Read default clauses before signing
• ●Understand personal guarantee implications
• ●Know what collateral is at risk
• ●Communicate early and often