Find Me Funders
Acceleration clause
Also called acceleration, accelerate the balance.
The clause that makes everything still owed due immediately on default, rather than on the original schedule.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
What it means
On an amortizing loan, acceleration turns the remaining principal plus accrued interest into a single sum due now. You lose the benefit of time, but you generally do not owe interest that was never earned.
On a merchant cash advance the arithmetic is harsher, because what accelerates is the purchased amount (the full right to receive), not the money that was advanced. A funder that advanced 100,000 against a purchased amount of 140,000 and declares default in week three is typically claiming the unpaid share of the 140,000, not the unpaid share of the 100,000. The entire fee is treated as earned the moment the contract is signed.
Acceleration is usually paired with three other things in the same paragraph: the confession of judgment or a fast route to judgment, a collection-costs and attorney-fee add-on, and a security interest that lets the funder pursue receivables directly. Read what triggers it. In MCA agreements the trigger list is long and includes acts that are not missed payments at all: blocking the debits, changing bank accounts, taking additional financing, closing or selling the business, or making a statement in the application that later proves inaccurate.
## What to look for
- Does default require notice, and is there any cure period
- Does acceleration reach the purchased amount or only the unpaid advance
- Does a single returned debit qualify, or does it take a stated number
Where this one catches people
Worked through
Advance of 100,000, purchased amount 140,000, daily payment 1,100. After 30 banking days the merchant has paid 33,000 and blocks the debits. Under acceleration the funder claims 140,000 minus 33,000 = 107,000, plus contractual collection costs and fees, on money it advanced 100,000 of six weeks earlier.
Figures in the example are illustrative. They show the arithmetic, not a quote — what any one lender would charge is on that lender's page, where it is published at all.
Where you will meet this term
Read next
Acceleration clause — common questions
What does acceleration clause mean?
The clause that makes everything still owed due immediately on default, rather than on the original schedule.
Where does acceleration clause catch people out?
People assume that defaulting early means owing less, the way an early payoff on a bank loan means less interest. In a factor-rate product the opposite is true: default accelerates the whole fixed payback, so the earlier it happens, the higher the effective cost of the money you actually had.
Is acceleration clause the same as an interest rate?
Acceleration clause is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does acceleration clause apply to?
Merchant Cash Advance, Working Capital, Term Loan, Business Line of Credit.
Is there a worked example of acceleration clause?
Yes, on this page, and it is labelled illustrative. It shows the arithmetic, not a quote from any lender.
What else should I read alongside acceleration clause?
Confession of judgment, Cure period, Default, Factor rate, Purchased amount.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.