What a demand letter from a merchant cash advance funder generally contains, how it differs from a lawsuit, and the steps to take after receiving one.
A demand letter is a written request for payment, often stating that the business is in default and demanding the remaining balance by a certain date. It is not the same as a lawsuit — but it can come before one.
What it typically includes
- A claim that a default has occurred and why
- The amount demanded, sometimes including fees
- A deadline
- A statement of possible next steps, such as legal action
What to do
- Don't ignore it. Keep a copy and note the date received.
- Compare the amounts to your records and agreement.
- Review the default and reconciliation sections of your contract.
- Consider speaking with an attorney, especially if the letter references a lawsuit or confession of judgment.
If court papers have already arrived, see what to do when a funder threatens legal action. To discuss your broader situation, contact us.
This article is for general educational purposes only and is not legal, tax, or financial advice. Consult a qualified professional about your specific situation.
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