Agreements typically define default broadly — missed payments, closing or changing the bank account, taking additional financing where restricted, or misrepresenting information in the application. Industry default rates run 11–18%, and above 40% on stacked positions.
Related terms
NSF
A returned payment caused by insufficient balance in the merchant’s account.
Default rate
The share of advances that fail to be repaid in full under their original terms.
Stacking
A merchant taking an additional advance while an earlier one is still outstanding, so multiple remittances draw on the same receipts.
Cure period
A contractual window in which a merchant can remedy a breach before default consequences apply.
Clawback
A funder recovering commission already paid, typically when a merchant defaults early in the term.
Personal guarantee
A commitment by the business owner to be personally liable if the business does not meet its obligations.