Payoff letter

A payoff letter turns the question of what you owe into a figure you can wire. It should state the payoff amount, the date it is good through, any early payoff discount applied, how to send the money and what the funder will do once it is paid.

Get one before any payoff: a renewal, a consolidation, a refinance or a sale of the business. Debits keep running until the funder confirms payment, so ask how scheduled debits will stop and how any overpayment will be refunded.

The letter should also cover releasing the collateral. Once nothing is owed and no further funding is committed, Article 9 generally requires the secured party to file or send a termination statement, usually on a UCC-3 form, within 20 days of your written demand. Ask for that commitment in the letter so you do not have to chase it later.