What owners expect: the wire lands, the lender disappears, and you send a payment every month like a car loan.
What actually happens: the wire lands, and a relationship begins in which the lender can see your bank account, questions your Tuesday, and shows up quarterly to count things. Nobody hid this — it was all in the documents — but almost nobody reads a credit agreement the way its authors do. Here’s what you actually agreed to, product by product.
Bank account visibility — assume it, don’t debate it
Modern non-bank lending is built on seeing your cash in motion:
- RBF funders collect by daily or weekly ACH debit and typically require read-only access to your business bank account (via Plaid-style connections) both to underwrite and to monitor. They will see every deposit, every other lender’s debit, and every NSF — in close to real time. Closing the connection mid-term is usually an event of default.
- ABL lenders may go further: a lockbox or blocked account, where your customers pay into an account the lender controls, the lender sweeps what it’s owed, and forwards the rest. In stricter deals (“full cash dominion”), every dollar of collections routes through them, every day.
If the phrase “they need access to my bank account” makes you flinch, understand the trade honestly: that visibility is why they can fund in days without three years of audited statements. The collateral isn’t really your AR or your equipment — it’s their unblinking view of your cash flow.
The reporting treadmill
Bank term loans might want annual statements. Private capital wants a rhythm:
| Cadence | What’s typically due |
|---|---|
| Daily/weekly | Collections activity (full-dominion ABL); remittance data (RBF) |
| Monthly | Borrowing-base certificate — a signed calculation of eligible AR/inventory; aging reports; financial statements 15–30 days after month-end |
| Quarterly | Covenant compliance certificate — your CFO certifies leverage, coverage, liquidity ratios |
| Annually | CPA-prepared (reviewed or audited) financials, often a requirement you didn’t have before |
For a company with a part-time bookkeeper, this cadence is a genuine operating cost — figure real hours every month, and sometimes a controller hire you weren’t planning. Price that in when comparing offers, because “cheaper” money with heavy reporting isn’t always cheaper.
Field exams: the quarterly houseguest
Asset-based and many private credit facilities include field examinations — the lender’s examiner (or hired firm) comes to you, typically one to four times a year, and verifies that the collateral you certify actually exists: sampling invoices, calling your customers to confirm balances, testing your dilution math, counting inventory. You pay for it — exam fees are billed to the borrower, typically a few thousand dollars per visit, on top of interest.
A clean exam is routine. A messy one — invoices that don’t trace, customers who dispute balances — doesn’t just embarrass you; it re-prices your availability the same day.
Covenants: the tripwires you agreed to
Private credit documents carry financial covenants — minimum EBITDA, maximum leverage, minimum liquidity — tested quarterly. Miss one and you haven’t just disappointed anyone; you’ve triggered contractual remedies: default-rate interest, tightened advance rates, a required consultant, or acceleration. In practice most first misses end in a waiver — for a fee — but the negotiating table tilts permanently. The lender didn’t take your keys at closing; the covenants mean they’re handed over automatically the quarter your numbers slip.
Also standard: personal guarantees (or at minimum “bad-boy” guarantees covering fraud), blanket UCC-1 liens on everything the business owns, and consent rights over new debt — which is why stacking a second facility behind their back is both visible (they see your bank account, remember) and a default.
So is it a bad deal?
No — it’s an adult deal. The oversight is the honest price of speed and of yes. But walk in knowing:
- Read the reporting exhibit before you sign, not after the first late-report notice. If you can’t produce a borrowing-base certificate monthly today, say so and negotiate the cadence — or hire the bookkeeping first.
- Model the all-in cost: rate + exam fees + reporting hours + the CPA upgrade. Compare that to alternatives.
- Match intrusiveness to need. A short, defined bridge with a clear exit deserves a light structure (this is where RBF’s simplicity genuinely shines — daily visibility, yes, but no field exams, no covenants, no lockbox). A multi-year revolver deserves the full harness — and should be priced like it.
The owners who resent their lender signed documents they didn’t read. The owners who do fine read the oversight terms first, priced the burden honestly, and picked the structure whose intrusiveness matched their situation. Be the second kind.
Not sure which structure your file actually supports? Run the assessment or send us your documents — we’ll tell you straight.