Important facts about advances and the repayment process
To learn more about your customers Autobooks Capital experience within our application, click here.
Customers may take multiple advances from Autobooks Capital. The total of active advances cannot exceed the total advance line available.
For example:
A customer has a capital advance line with an approved limit of $35,000. The customer can draw a portion this month, say $10,000. A weekly repayment schedule will be established for that draw. Later, a customer may make an additional draw of up to $25,000 (or multiple smaller draws) with its own repayment schedule. The only limit to advance line draws is the total line dollar limit ($35,000 in this example).
Advance funding
Funds drawn on a capital advance line settle into the checking account in 1-2 business days. The average advance line limit ranges between $22,000 and $35,000. Customers usually draw between 50 - 60% of their available line at a time.
Customers must take a minimum of $100 per draw, and the first draw must be a minimum of $1,000.
The repayment process
Customers will repay their advances weekly. A fee for the capital advance will be assessed based on the advance dollar amount (called a Factor Rate). All fees will be prominently displayed to the customer prior to taking an advance. Repayments will be debited from their checking account and all repayment activity is tracked within the Autobooks application.
Repayment terms are derived based on DDA activity at the time of the draw. The average repayment (including the capital fee) will be spread out over 36 weeks, while the maximum term offered is 52 weeks.
Customers may repay an advance early with no penalty. In fact, repayments ahead of schedule receive a discount in the capital fee.
To learn more about the customer experience with taking an advance and managing repayments, click here.
Repayment for multiple advances
Each advance will have its own repayment schedule. Repayments will occur on a weekly basis, and the total amount owed across all active advances is debited in a single ACH transaction from the checking account.
For example: say a customer has taken two draws from their capital line. The first draw has a weekly repayment of $150. The second draw (taken a few months after the first one) has a weekly repayment of $100. That means the customer will see one weekly debit from Autobooks Capital for $250 to repay both advances.
The customer can view repayment activity for all of their advances within the Autobooks application.
Repayment challenges
Customers that don't have enough funds in the checking account for a scheduled repayment may have their repayment period extended, thus reducing the weekly debit amount. If repayment fails for two scheduled payments in a row, the capital advance line will be closed to additional draws and the customer will be contacted to determine a collection process.
Collection options may include a reduced payment plan or extended terms, depending on the business' anticipated revenue.
Autobooks bears the risk for any repayment challenges with the Capital feature, the financial institution does not provide a personal guarantee. We have partnered with FundBox as our capital partner for this exciting small business tool.