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Servicing
Also called loan servicing, servicer.
The administration of a funded deal after closing — taking payments, keeping the ledger, sending statements, handling reconciliation requests, issuing payoffs and managing collections.
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
Servicing is often performed by someone other than the party whose name is on the contract. A funder may sell the receivable or the loan and keep servicing, sell the servicing and keep the economics, or outsource collection entirely. Syndicated advances add another layer: the lead funder services while participants hold slices of the return.
What this means operationally is that the entity debiting your account, the entity you must send a reconciliation request to, and the entity that can approve a settlement may be three different companies. Contracts usually name the servicer's contact channel and, importantly, the required form of notice — email to a specific address, or written notice to a specific street address.
Servicing transfers are common and are usually notified by letter with new payment instructions. That letter is also the template most frequently imitated in payment-redirection fraud, which is why funders repeat instructions to verify by phone using a previously known number.
Where this one catches people
Sending a reconciliation request, a payoff request or a dispute to the salesperson who closed the deal is not notice under the contract. The broker is not the funder, and the funder may not be the servicer. Requests sent to the wrong party do not start any clock, and a merchant who believes they asked for reconciliation in March may find the contractual position is that they never asked at all.
Where you will meet this term
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Servicing — common questions
What does servicing mean?
The administration of a funded deal after closing — taking payments, keeping the ledger, sending statements, handling reconciliation requests, issuing payoffs and managing collections.
Where does servicing catch people out?
Sending a reconciliation request, a payoff request or a dispute to the salesperson who closed the deal is not notice under the contract. The broker is not the funder, and the funder may not be the servicer. Requests sent to the wrong party do not start any clock, and a merchant who believes they asked for reconciliation in March may find the contractual position is that they never asked at all.
Is servicing the same as an interest rate?
Servicing 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 servicing apply to?
Merchant Cash Advance, Working Capital, Term Loan, SBA Loan, Invoice Financing.
Is there a worked example of servicing?
Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.
What else should I read alongside servicing?
Payoff letter, Reconciliation, Settlement, Statement of account, Syndication.
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.