Payoff letters
A payoff letter is the funder’s written statement of exactly what ends the agreement. A weak one leaves you paying a few more debits, or with a lien that never gets released. Here is the checklist and a dated example.
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Updated October 13, 2026 · Merchant Fund Express
A payoff letter states the exact amount that fully satisfies the agreement if received by a specific date, where and how to send it, and what the funder will do once it arrives. Ask for it in writing, on the funder’s letterhead, any time you pay off early, refinance, take a buyout or close a renewal. A new funder buying out an existing position will need it too.
| Line | What it should say |
|---|---|
| Business and agreement | Legal business name, agreement or account number and the original funding date |
| Payoff amount | One dollar figure, not a range |
| Good-through date | The last date that amount is valid |
| Per diem or daily change | For interest loans, the interest per day after the good-through date; for advances, how each scheduled debit lowers the figure |
| Discount applied | Any early payoff discount, how it was calculated and which clause gives it |
| Pending debits | Debits already sent to your bank that have not cleared, and whether they are counted |
| Payment instructions | Wire or ACH details, a reference to include, and how to verify them by a known contact |
| What happens after | Stopping all debits, a zero-balance or paid-in-full letter, and filing a UCC-3 termination |
| Signature | A named person and a date |
Assumptions: $60,000 funded with a total payback of $78,000, paid by $600 daily debits. By Friday, October 23, 2026, $46,800 has been remitted. The agreement includes a 10% discount on the remaining balance if it is paid off early. The letter is issued Friday, October 23 and is good through Friday, October 30, 2026.
| Line | Amount |
|---|---|
| Total payback | $78,000.00 |
| Remitted through Fri Oct 23 | − $46,800.00 |
| Remaining balance | $31,200.00 |
| Early payoff discount (10% of $31,200) | − $3,120.00 |
| Payoff if received Fri Oct 23 | $28,080.00 |
Debits of $600 continue on Monday, Tuesday and Wednesday, October 26 to 28, while the wire is arranged. If the letter is written correctly, each cleared debit lowers the remaining balance by $600 and the discount by $60, so the payoff falls by $540 per debit. After three debits the remaining balance is $29,400, the discount is $2,940, and the payoff for a wire received Thursday, October 29 is $26,460.00. A letter that ignores those three debits would have you pay $1,620 more than you owe.
All figures in worked examples are illustrations of the arithmetic, not offers or quotes. Real terms depend on your file and the funder.
Assumptions: a term loan with a principal balance of $40,000.00 on Friday, October 23, 2026, at 18% simple annual interest. The per diem is $40,000 × 0.18 ÷ 365 = $19.73. A letter good through Friday, October 30 adds 7 days of interest: $138.11, for a payoff of $40,138.11. If the wire arrives Monday, November 2 instead, add three more days ($59.19), for $40,197.30. That is why the per diem line matters.
All figures in worked examples are illustrations of the arithmetic, not offers or quotes. Real terms depend on your file and the funder.
Request the letter 3 to 5 business days before you want to pay, and ask for one dated to the day the wire will land. On the day you wire, send the confirmation reference to the funder. Watch your bank for any debit after the payoff and ask for its return. Then request the lien release; our guide to the UCC termination request covers that step. If an early payoff discount is involved, read MCA early payoff and run the figure in the MCA payoff calculator.
In a buyout or refinance, the new funder usually sends the payoff from the proceeds and needs the letter to close. Have the letter ready and current, along with about 3 months of business bank statements as PDFs. Existing advances of $100,000 or less can often be bought out; see MCA buyout. To see whether your file fits, start the 5-minute application; it begins with a soft credit pull.
Only through the good-through date printed on it, often 5 to 10 days. After that, ask for a new one rather than estimating.
No. A balance statement shows what is owed today under the normal schedule. A payoff letter shows the amount that ends the agreement if paid by a date, including any discount or per diem.
Yes. It should say the funder will file a termination or authorize you to file one after the payoff clears.
Point to the clause in your agreement and ask for a corrected letter before you pay. Do not rely on a verbal promise.
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