Common in advances despite the transaction being framed as a purchase of receivables rather than a loan. A guarantee broad enough that the funder carries no genuine risk of the receivables failing is one of the features cited in recharacterisation arguments.
Related terms
Recharacterisation
A court or regulator determining that a transaction structured as an advance was, in substance, a loan.
Default
A merchant’s failure to meet the terms of the advance agreement, most commonly repeated missed or returned remittances.
Collateral
Assets a secured party can claim if the obligation is not met.