Payment Modification: Meaning in a Merchant Cash Advance
A payment modification is a negotiated change to the payment terms of a merchant cash advance, such as a lower payment for a period, often documented in a written addendum. Unlike reconciliation, it usually happens outside the contract's standard process.
What does payment modification mean?
Sometimes a business needs more relief than the reconciliation clause gives, or needs it faster. A modification is a deal struck with the funder: lower payments for a set time, a pause or a new schedule. In return, the funder sometimes extends the term, adds a fee or asks for updated statements along the way. It gets written up as an amendment you both sign.
Why does payment modification matter to your business?
A modification can keep a struggling business from defaulting. It also creates a new set of terms, so read the addendum as carefully as the original contract. Look for added fees, a changed total or new obligations. If the modification looks worse than reconciliation would, ask why you can't use the reconciliation clause instead.
How do you ask for a modification?
Call the funder early, explain what happened and what you can afford, and follow up in writing. Funders are far more flexible before payments bounce than after.
Should you keep paying while you ask?
Keep making the current payment until the modification is signed, unless the funder tells you otherwise in writing. Stopping payments while you negotiate weakens your position and can trigger default provisions that make the conversation harder.
Why get it in writing?
A promise made on the phone isn't a modification. Ask for the signed amendment before you rely on the new payment.
Where will you see it?
In a separate amendment or addendum, and on your bank statement as a new payment amount.
Which terms are related to payment modification?
The full list is in the glossary. Owners ask about this in Can I make extra payments on my merchant cash advance?.
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.