Advances

Canopy’s Advance engine is designed for event-driven financing. Unlike traditional loans based on generic creditworthiness, these facilities allow you to fund specific operational assets—future revenue, open invoices, purchase orders, or accrued wages.

We enable financial institutions to structure products that rely on asset performance rather than fixed amortization schedules. Whether you are building a Merchant Cash Advance (MCA) for retail, a Factoring solution for logistics, or an Earned Wage Access (EWA) product for the gig economy, Canopy provides the infrastructure to track "purchased future amounts" and variable settlement cycles.

Core Product Structures

1. Merchant Cash Advance (Revenue-Based Financing)

A purchase of future sales receipts. The business receives an upfront lump sum in exchange for a specified amount of future revenue (the "Purchased Amount").

Variable Remittance (Split-Settlement): Configure repayments as a fixed percentage (e.g., 15%) of daily credit card sales. The system automatically adjusts the estimated payoff date based on actual revenue volume.
Factor Rate Pricing: Replace APR with "Buy Rates" or "Factor Rates" (e.g., 1.25x).
True-Up Logic: Native support for "reconciliation" periods to adjust remittance rates if actual sales velocity deviates significantly from underwriting projections.

2. Invoice Factoring (A/R Financing)

A facility where you purchase accounts receivable (invoices) at a discount to provide immediate working capital.

Advance Rates & Reserves: Disburse a percentage of the invoice face value (e.g., 85%) while holding the remainder in a "Reserve Account" until the end-debtor settles.
Contra-Accounting: Track the End-Debtor (the entity paying the invoice) separate from the Borrower (your client).
Fee Structures: Configure "Discount Fees" that tick up the longer the invoice remains unpaid (e.g., 1% every 10 days).

3. Purchase Order (PO) Finance

Short-term capital used specifically to pay suppliers for goods that have been ordered but not yet produced or shipped.

Direct-to-Supplier Funding: The draw logic supports disbursements to third-party vendors (suppliers) while booking the liability to the borrower.
Trade Cycle Management: Link the repayment trigger to the "conversion" event—when the PO converts into an Invoice or when goods are delivered.

4. Reverse Factoring (Supply Chain Finance)

A buyer-led facility where you pay a supplier’s invoices early on behalf of a large buyer.

Extension Logic: The buyer (your client) gets extended payment terms (e.g., Net 90), while the supplier gets paid immediately (Net 0) minus a small discount. Canopy manages the spread and the settlement timeline between the two parties.

5. Earned Wage Access (EWA)

A liquidity solution that allows employees or gig workers to access their accrued but unpaid earnings prior to payday.

Accrual-Based Limits: Dynamically adjust the "Available to Draw" limit based on real-time data from time-tracking or payroll systems (e.g., 50% of shifts worked).
Payroll Deduction Logic: Automate repayment via a single "sweep" from the next payroll cycle, ensuring the advance is settled before the net check hits the employee's account.
Alternative Fee Models: Support non-interest pricing models standard in EWA, such as flat transaction fees ("$2.99 instant transfer"), voluntary tips, or monthly subscription access.

Risk & Collateralization

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Any of the above structures can be secured. Canopy allows you to map specific collateral (e.g., "Invoice #1024" or "UCC Filing #559") to specific advances, ensuring your Loan-to-Value (LTV) calculations are always accurate at the asset level.. Check out our Secured Lending documentation and API endpoints to get started with secured lending