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Case File 002 Daily payment financing

Almost $400 a day, out of a business already losing money.

Daily payments looked small. Turned into a monthly number, they were bigger than the problem they were meant to fix.

Published October 14, 2026 Sources reviewed October 14, 2026

The situation

A new owner takes over a coffee business through seller financing. The shop is losing money, and the owner's credit is poor.

The only money on offer is unsecured financing with daily payments. The owner takes it to keep payroll going while fixing operations, then takes more.

About $20,000 of debt later, the payments are close to $400 every business day. A law firm eventually gets the debt restructured.

The numbers

$400Reported daily payment across the financingOwner's account, r/smallbusiness, posted March 22, 2026. Unverified.
$2,000Per week, at five business daysBig Brain Funding math: $400 x 5.
$8,700Per month, roughlyBig Brain Funding math: $400 x 21.7 average business days a month.
At $400 a day, a $20,000 balance is gone in about 50 business days, roughly ten weeks. That sounds fast. It also means pulling about $8,700 a month out of a shop that was already losing money. The financing did not fix the gap. It made the gap bigger and put it on a schedule.

What the owner did

  • Used daily payment financing to cover a loss, not to fund something that earns money back.
  • Took more than one at a time.
  • Never set the monthly total next to what the business keeps in a month.
  • Got help only after the payments were already too big, through a law firm restructuring.

Capital options that existed

Go back to the seller first

The seller financed the sale and only gets paid if the shop survives. A few months of reduced or deferred payments on the seller note can free up cash without adding a new lender.

SBA Microloan

Up to $50,000, with an average of about $13,000 and terms up to seven years. Loans come from nonprofit, community based lenders approved by SBA, and those lenders make their own credit decisions.

Source: SBA, Microloans

If you take a sales based advance, read the cost disclosure

California has required providers to disclose an estimated annual rate on this kind of financing since December 9, 2022. New York has required it since August 1, 2023, for businesses based there. Ask for the disclosure in any state, and ask whether the payment drops when sales drop.

Source: California DFPI, Commercial Financing Disclosures

Know what has gone wrong before

In 2020 the FTC alleged that one cash advance company kept withdrawing money after balances were repaid and took fees not shown in the contract amount. The company settled in April 2021 and paid $9.8 million.

Source: FTC, Yellowstone Capital settlement, April 22, 2021

What to do instead

  1. Turn the daily payment into a monthly number before you sign. Multiply by about 21.7 for business days.
  2. Set that number next to what the business actually keeps in a month after every bill. If the payment is bigger, stop.
  3. Fix or price the leak first. Financing that covers a loss buys time, and only if you know what the time is for.
  4. Ask for the total payback and the early payoff cost in writing.

Ask before you sign

  1. What does the daily payment add up to in a month?
  2. What happens in a slow week? Does the payment drop, or does the same amount still come out?
  3. What is the total I pay back, and what does it cost to pay it off early?

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Sources

  1. Owner's account, r/smallbusiness on Reddit, posted March 22, 2026 Public post. Not verified by Big Brain Funding.
  2. SBA, Microloans: amounts, terms and lenders
  3. California DFPI, Commercial Financing Disclosures (effective December 9, 2022)
  4. New York DFS, Commercial Finance Disclosure Law regulations, 23 NYCRR Part 600 (compliance from August 1, 2023) Law firm summary of the final rule.
  5. FTC, complaint against Yellowstone Capital, August 3, 2020
  6. FTC, Yellowstone Capital settlement, April 22, 2021

Case Files are educational stories, not client results. A composite case combines a public account with the rules that apply to it, and its details are simplified. Big Brain Funding is not a lender or broker of record, does not make credit decisions, and does not guarantee that any business qualifies for any product. Educational only. Not financial, legal, or tax advice.