Business funding report
The contract is beatable on the balance, but one clause can make the owner personally liable. Talk to a lawyer before responding to the collector.
You got $17,000 up front and agreed to pay back $23,799 through 11% of every card sale. It's written as a sale of future card sales, not a loan, so there's no interest and no fixed due date. If sales drop honestly, that's their risk. But you personally promised to follow the rules, and the biggest rule is that every card dollar has to land in their account first. Break that rule and the unpaid balance can become your personal debt.
The owner may already be in breach of the sole-depository covenant through POS instant deposits. That turns a business debt into a personal one, and what gets said or sent next matters. A lawyer should see the deposit history first.
“ensure that the Corresponding Account shall be the sole depository for the Merchant's credit card settlements”
Instant-deposit or cash-out features in your POS can route card money around them. That breaks a covenant, and covenants are exactly what you guaranteed personally. Check where instant deposits land before you say anything to the collector.
“the Company shall have all of the rights and remedies of a secured party under Article 9 ... five days notice constitutes reasonable notice.”
They hold a lien on your accounts, equipment, inventory, and business name. After a breach they can move on that collateral without a lawsuit, as long as there's no confrontation, and must give 5 days' notice before selling it. The realistic move is telling your card processor to pay them directly.
“not sell, dispose, convey or otherwise transfer its business or assets without the express prior written consent of the Company”
A sale without written consent is a covenant breach, which makes you personally liable. Any sale has to pay them off or get their consent at closing.
“an account monitoring fee of up to $200 per month ... This fee will automatically begin if the contract goes into Default.”
If the balance they quote is higher than $23,799 minus what you've paid, this fee is a likely reason. Ask for the full ledger in writing.
“Upon any violation of the Agreement, the Company reserves the right to adjust or increase the Remittance Percentage”
They have to notify you and your processor in writing first.
“Merchant shall furnish the company and Processor such information as the Company may request from time to time.”
Anything you send must be true. False information counts as a material breach of the whole agreement, so have a lawyer look before you send statements that might show a problem.
“No modification, amendment, or waiver ... shall be effective unless the same shall be in writing and signed by all parties”
A reduced payment agreed over the phone can be taken back. Get any new arrangement in a signed document.
“Neither this guaranty nor the Agreement is a guaranty or promise of payment by a certain date”
You guaranteed that you'd follow the rules, not that the business would earn the money. If sales drop honestly, that's their risk.
“governed by ... the laws of the State of Florida ... any Florida state or federal court sitting in Hillsborough County”
They can't get a judgment on paperwork alone. They have to sue in Florida, serve you, win, and then register the judgment in your state before they can collect on it.
“Interest will not accrue on the Future Receivables. The Purchase Price is not a loan”
The most they can claim is the $23,799 plus the fees the contract names. Anything more needs an explanation.
Ask for an itemized ledger before discussing any new payment plan, so the balance can be checked against the contract. Fill in the [BRACKETS] before you send it.
[DATE] [COMPANY NAME] Attn: [COLLECTOR NAME], Risk and Collections [COMPANY ADDRESS] Re: Purchase and Sale of Future Receivables Agreement dated [AGREEMENT DATE], Merchant [BUSINESS NAME] [COLLECTOR NAME], I want to work this out and I'm pulling my records together so I can put a written payment proposal in front of you. Before I do, please send me a complete itemized ledger for this agreement showing: 1. Every remittance you have received since [AGREEMENT DATE], with dates and amounts. 2. Every fee charged, with the date, amount, and the section of the agreement it is charged under. 3. How you calculated the current balance you have quoted. The agreement sets the Remittance Amount at $23,799. I'd like to understand how the balance compares to that figure. In the meantime I will continue the weekly payment we discussed. Please send the ledger in writing to [YOUR EMAIL]. Thank you, [YOUR NAME] [TITLE], [BUSINESS NAME]