A payoff letter turns an estimated MCA balance into a dated closing figure. The request should go to the holder or its authorized servicer using the notice method in the agreement. Keep the written request, the response, and the contact information used to verify it.
What the letter should identify
- Legal name of the holder and the merchant
- Agreement or account identifier
- Payoff amount and the date through which it is valid
- Any daily change, additional charge, or condition after that date
- Wire or certified-funds instructions with an independent verification contact
- Treatment of scheduled withdrawals while the payoff is pending
- What release, zero-balance confirmation, and UCC termination will follow payment
Reconcile it with three records
| Record | Question to answer |
|---|---|
| Executed agreement | What amount was advanced and what amount was contracted to be remitted? |
| Bank statements or processor history | Which withdrawals cleared and on what dates? |
| Holder ledger or payoff letter | How were payments credited and how was the current figure calculated? |
The numbers may not tie by simply subtracting withdrawals from the contracted amount. Returned payments, fees, reconciliations, modifications, split processing, and other contract terms may affect the holder's calculation. A discrepancy should be documented and raised through the merchant and its counsel where appropriate. The refinance desk should not invent a compromise balance.
Plan for withdrawals around closing
The letter should explain whether ordinary debits continue through the payoff date and how any overpayment will be returned or credited. The closing statement should avoid paying the full quoted amount while ignoring withdrawals that clear before the wire. After payment, monitor the account and document whether scheduled debits actually stop.
Close the evidence loop
A completed file should contain the payoff request, issued letter, independent verification record, outgoing wire, receipt, zero-balance confirmation, and any release or UCC termination evidence. That package protects the business from having to reconstruct the transaction months later when it applies for new credit.
Is a dashboard screenshot a payoff letter?
No. It may support a preliminary estimate, but a closing payoff should be dated, attributable to the holder, and clear about payment and release conditions.
What if the holder will not issue a letter?
Document the requests and involve counsel. The financing desk can evaluate the available evidence, but it should not state that an uncertain balance is final.
Should the business stop debits before payoff?
Not without reviewing the agreement and obtaining legal advice. An unauthorized stop may create a default or other consequences.
Sources and authorities
Always confirm current authority and the rules of the applicable jurisdiction.
- Small business lending rule FAQs: merchant cash advances — Consumer Financial Protection Bureau
Qualified Commercial Underwriting Desk
Credit and capital markets
The Qualified Commercial underwriting desk reviews commercial real estate, dealer and Main Street files daily. The Academy is written from that work (how files are actually read, priced and declined) rather than from a rate sheet.
Educational content only. Nothing here is a commitment to lend, an offer of credit, or tax, legal or accounting advice. Program terms, timelines and thresholds vary by lender, file and market conditions, and any figures shown are illustrative.