Guide

How to read a funding agreement a practical guide.

Agreements are long, but a few sections decide most of what matters.

✓ Checking what you qualify for does not affect your credit score.

What should you check in a business funding agreement?

Short answer: Find four numbers: amount funded, fees deducted, net amount received and total payback. Then check the payment amount, frequency, method and account; any reconciliation clause or early-payoff discount; limits on other financing or changing accounts; what counts as default; and the scope of any personal guarantee and security.

Key facts

Net received vs total payback = your real cost
Payment method, days and account
Reconciliation and early-payoff terms
Default triggers and guarantee scope

Overview

Agreements are long, but a few sections decide most of what matters.

The money

Find the amount funded, fees deducted, the net amount you receive and the total payback. Write all four down.

The difference between net received and total payback is your real cost.

The payments

Find the payment amount, frequency and method: fixed debit, percentage of sales or split from processing. Note which account is debited and on which days.

Check for minimum payments.

Adjustments and early payoff

Look for reconciliation clauses that adjust payments to actual sales, and early-payoff discounts. Both matter if your situation changes.

If neither exists, assume the payback is fixed.

Restrictions and default

Look for limits on other financing, changes of account or processor and what counts as default. Know the consequences.

Ask about anything you do not understand.

Personal guarantees and security

Find any personal guarantee and any security registration. Understand what they cover.

If something is unclear, get advice before signing. A few minutes now saves months later.

Typical starting points

Monthly revenueTypically from around $20,000 a month in deposits for Canadian files. The exact line varies by funder and by file.

Time in businessTypically about 12 months. Newer businesses can be reviewed, but the options narrow.

Account healthLimited low-balance or negative days. Funders read the last few months of bank statements for this.

CreditScores from 500 are considered. A score of 600 or higher opens more options and better offers.

DocumentsA signed application and recent business bank statements, typically the last four months.

Existing advancesFiles with an existing advance can be reviewed, including second position.

Questions to ask before signing

Ask the funder to confirm in writing: the net amount you will receive, the total payback, the payment amount and schedule, whether payments can be reconciled to sales, whether there is an early-payoff discount, what counts as default and whether a personal guarantee applies. Compare the answers with the agreement itself. If the two differ, the agreement is what binds you, so resolve the difference before signing.

Mistakes to avoid

Signing the same day without reading the payment and default sections
Relying on what was said on the phone rather than what is written
Overlooking a personal guarantee in a separate document

Key takeaway

The money, the payments, adjustments, restrictions and guarantees: five sections decide almost everything. Read them before you sign, not after.

Keep a signed copy with your records and a one-page summary of the key numbers. It makes future decisions about renewal, payoff or refinancing far easier.

Sources and review

Reviewed by the Merchant Fund Express team on October 12, 2026. Official pages checked as of that date.

Common questions

Is this advice for my situation?

It is general education. Your file and agreements are specific, so read them and ask questions.

What should I do next?

Gather four months of statements and write what the money is for in one sentence.

Can you help me apply?

Yes. Apply once and the file is matched to the structure that fits.