Assignment Clause: Meaning in a Merchant Cash Advance
An assignment clause says whether and how each side can transfer its rights under the contract to someone else. In merchant cash advance agreements, it usually lets the funder assign freely while barring you from assigning without the funder's consent.
What does assignment clause mean?
Funders sometimes sell advances, share them with investors or hand servicing to another company. The assignment clause allows that. On your side, it usually says you can't transfer the contract, for example to a buyer of your business, without the funder's written consent.
Why does assignment clause matter to your business?
If your advance is assigned, the company collecting payments can change. Your terms stay the same, but you'll want to know who to contact. And if you're planning to sell the business or restructure it, the clause is one reason the funder has to be part of that conversation.
What is a notice of assignment?
When an advance is assigned, you should get notice with the new party's details. Keep that notice with your contract and update where you send questions and requests.
How is assignment different from syndication?
Syndication shares the advance among investors, while the lead funder usually keeps servicing. Assignment moves the rights more fully. Either way, your obligations don't change.
Who do you pay after an assignment?
Keep paying the way the contract and any notice direct you to. If you receive a notice of assignment you're unsure about, confirm it with the original funder before changing anything, since fraudsters sometimes send fake notices hoping payments get redirected to them.
Where will you see it?
In the general provisions near the end of the merchant agreement.
Which terms are related to assignment clause?
The full list is in the glossary. Owners ask about this in What's the difference between an MCA approval and an offer?.
A term on your offer you don't recognize?
Send us the line and we'll tell you what it means. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.