Lines of Credit

Products based on lines of credits, that can revolve or not, represent a dynamic and flexible approach to lending that can adapt to diverse business needs and borrower requirements. In Canopy, we've developed a comprehensive system that enables lenders to model various financial products using our line of credit structure, from traditional lines of credit to innovative financing solutions like Merchant Cash Advances (MCAs).

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Products Supported

Canopy out of the box can support a wide variety of line of credit based products, follow the links below for information and recipes on how to launch these in your sandbox today.

Cards

Operational Lines of Credit

Merchant Cash Advances

Advanced Features for Modern Lending

Cycle Management

Canopy's cycle management system adapts to the needs of various lending structures, whether it's a monthly billing cycle for credit cards, a daily remittance schedule for MCAs, or a custom cycle for operational credit facilities. Our platform supports:

• Fixed or flexible cycle definitions, enabling daily, weekly, bi-weekly, or custom periodic calculations.
• Event-driven retroactive cycle processing, allowing lenders to trigger cycle recalculations based on specific criteria (e.g., a failed ACH payment, a borrower winning a dispute and reversing a draw).
• Grace periods and dynamic due date adjustments to provide borrowers with flexible repayment options while maintaining lender-defined constraints.

This adaptability ensures that lenders can align repayment schedules with borrower cash flow, minimizing default risk and improving overall portfolio performance.

Payment Structures

Canopy supports a broad spectrum of payment methodologies across different lending products, allowing lenders to define how payments are applied and structured:

• Traditional fixed minimum payments, common in credit cards and operational lines of credit.
• Percentage-based repayment models, widely used in MCAs, where payments adjust based on business revenue.
• Waterfall-based payment application, where payments are allocated in a predefined order (e.g., fees → interest → principal) or customized based on lender rules. More information on how Canopy pours payments can be found here
• Interest-only payments with balloon structures, enabling flexible repayment plans for certain commercial lending products.

With customizable payment hierarchies, Canopy enables lenders to define rules that align with their business models while maintaining compliance and clarity for borrowers.

Dynamic Balance Management

Managing balances across revolving credit, merchant cash advances, and operational credit lines requires a comprehensive system that ensures real-time accuracy. Canopy’s dynamic balance management framework provides:

• Real-time tracking of available credit, outstanding balances, and accrued charges across multiple loan components.
• Multi-draw tracking, where each draw within a credit facility maintains its own interest accrual, fees, and repayment schedule (if needed).
• Adjustable credit limits, allowing for dynamic increases or reductions based on borrower repayment behavior, risk assessment, or pre-set triggers.
• Multi-currency and cross-border balance tracking, supporting international lending scenarios where FX considerations are relevant.

This level of precision allows lenders to proactively manage credit risk, optimize capital utilization, and provide transparency to borrowers.

Flexible Interest Calculation

Different lending models require distinct approaches to interest and fee structures, and Canopy’s platform ensures that lenders can implement:

• Daily, weekly, or monthly compounding interest, allowing flexibility in structuring long-term and short-term credit products.
• Simple interest, factor rate-based pricing (common in MCAs), or tiered APR structures, adapting to different revenue models.
• Deferred interest or interest holiday periods, supporting promotional lending strategies.
• Custom fee logic, including origination fees, late fees, annual fees, and usage-based fees tailored to the specific credit product.

By offering granular control over interest and fee calculations, Canopy enables lenders to design competitive and sustainable lending products that align with market demands.

Automated Cycle Processing

Lenders need scalable automation to handle high-volume lending operations efficiently. Canopy’s automated cycle processing capabilities include:

• Automated statement generation for credit cards, operational credit lines, and revenue-based financing products.
• Scheduled payment processing and auto-debit capabilities, reducing late payments and ensuring compliance with repayment terms.
• Credit limit adjustments based on borrower performance, enabling dynamic credit increases or risk-based reductions.
• Delinquency automation and aging reports.

This automation significantly reduces operational overhead while ensuring accuracy, compliance, and borrower engagement.

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Operational Benefits