Drawdown and payoff requests, explained.

How a business draws on its credit line or pays off an old lender, and what the bank checks first

The life of one funding request, in five steps

1. The borrower sends a requestMarlow's notice of borrowing arrives Friday morning for Tuesday; Corvane's payoff letter arrives Tuesday at 11:58 a.m.
2. The desk matches it to the loanThe $3,000,000 delayed-draw tranche of a credit agreement signed September 28, 2026, none of it drawn yet.
3. Someone checks it against the agreement and the recordsNotice, minimum, availability, conditions, signer, wire instructions. This is where the changed account is caught, or paid.
4. One person releases, a second approvesAbove the bank's dual-control limit, $1,000,000 here, two people sign the wire.
5. The wire settles and the books followThe loan is booked, the old lender releases its liens, and the payment cannot be called back without the receiving bank's agreement.

Step 3 is the subject of this guide. The people, companies and figures in this example are fictional.

Two business-day calendars and other funding-desk surprises

Notice of borrowing, payoff letter, cut-off, call-back

Fourteen terms are defined in the one-page summary.

Borrow, refinance, repay, reset the rate, quote a payoff: what each request asks the bank to do

In shortOn the example desk most requests are draws on a revolving line; the rest are payoffs of another lender funded by a new loan, paydowns, rate elections and payoff quotes. Each type touches a different set of clauses, and only some of them send money to someone other than the borrower.

The shares on any real desk depend on its book. A bank with an asset-based lending group sees more draws against a borrowing base; a bank that refinances equipment and real estate loans sees more payoffs. No public source counts requests by type, so count a month of your own.

Revolver, delayed-draw term loan, swingline

The contract, the wire transfer law and the 2025–2026 changes behind every request

In shortNo regulation says how many days of notice a borrower must give; the credit agreement does. Once money moves, the wire transfer law in Article 4A of the Uniform Commercial Code decides who bears a loss, and Fedwire sets the hours. What changed lately is around the edges: Fedwire's new message format in July 2025, a name-check service from the Federal Reserve Banks for 2026, new ACH fraud-monitoring rules in March and June 2026, new model risk guidance in April 2026, and a decision to open Fedwire on Sundays and holidays in 2028 or 2029.

Why a SOFR loan needs three bond-market days of notice and a base rate loan needs a morning

In shortA Term SOFR loan's rate is fixed two business days before it starts, so the lender wants the request before that: three U.S. Government Securities Business Days ahead is the market's convention, by an hour the agreement sets. A base rate loan uses a rate already known, so same-day notice by late morning is common. Count the days on the right calendar: in 2026 the bond market closed on Friday, July 3 while the Federal Reserve's wire system was open, and closed early on six more days.

Under a Term SOFR loan, interest for the whole period is set in advance from a rate published two bond-market business days before the period starts.17 The lender needs the request before that fixing, so the Alternative Reference Rates Committee, the market group the Federal Reserve Bank of New York convened to replace LIBOR, recommended that "the borrower to provide notice of a borrowing request three US Government Securities Business Days prior to the borrowing date".17

Base rate loans, priced off the lender's prime rate or a similar index, need no fixing, so agreements usually allow notice on the morning of the borrowing. Prime stood at 7.00% and SOFR at 3.89% on October 13, 2026, with the federal funds target range topping out at 4.00%.23,24,25

The clock in one real agreement

A credit agreement filed with the SEC in 2025 shows how plainly this is written. The borrower must give notice "not later than 1:00 p.m. (Boston time)" on the day of a base rate borrowing, and on "the third Domestic Business Day before each proposed borrowing of a SOFR Loan". Each borrowing must be at least $1,000,000 plus multiples of $100,000, or the whole unused commitment. Once given, the notice "shall not thereafter be revocable by the Borrower" and obliges it to take the loan.16

Other agreements use 11:00 a.m. New York time, two days, or a different minimum. The clause in the signed agreement always wins over a desk's default.

Counting three days back, around a holiday

The full 2026 Federal Reserve holiday list: January 1 and 19, February 16, May 25, June 19, July 4 (a Saturday, so the Reserve Banks opened on Friday, July 3), September 7, October 12, November 11 and 26, and December 25.1 Many commercial banks open on Columbus Day and Veterans Day, but no Fedwire payment settles on them.

Lender time zones, late notices and other notice details

Conditions to each borrowing, and how much a borrower can actually draw today

In shortEvery borrowing repeats the borrower's promises: no default, representations still true, deliverables on time. Availability is the smallest of the limits that apply: the commitment, less loans and letters of credit outstanding, and on an asset-based line, the latest borrowing base. A draw that passes the notice check can still fail here, and the check must use today's records.

The agreement filed with the SEC is typical. Each borrowing requires that "immediately before and after such borrowing, no Default shall have occurred and be continuing" and that the borrower's representations "shall be true on and as of the date of such borrowing", and the borrowing itself is "deemed to be a representation and warranty by the Borrower" that those things are so.16

In practice the desk checks three records: the default flag in the loan system, the list of deliverables (compliance certificates, financial statements, borrowing base certificates) with their due dates and cure periods, and any condition specific to this draw, such as a payoff letter and permission to file lien releases on a refinancing.

Availability, worked through

The same agreement caps loans at "the lesser of (a) the Borrowing Base and (b) the Aggregate Commitment Amount".16 So the desk computes both and takes the smaller, then subtracts what is already out. For inventory lending, the Federal Reserve's examination manual describes a borrowing base certificate "obtained from the borrower at least monthly", which means the base a desk uses can be weeks old.26

A good return note offers what works: $290,000 today, or the full $640,000 once an updated certificate shows the new receivables. Borrowing base certificates have their own guide on this site; here the point is that availability must come from the latest certificate and the loan system's balance at the moment of the draw.

Reading a payoff letter: the good-through date, the daily interest and the cost of a missed cut-off

In shortA payoff letter is right for one day. Pay later and every day adds the per diem, the letter's daily interest; pay short and the loan is not discharged and the liens stay. Check the arithmetic, the day count and the release terms, then pay inside the good-through date. Weekends and holidays turn one missed cut-off into several days of interest.

What a complete commercial payoff letter carries

Which day count the per diem uses: Actual/360 or Actual/365

The ARRC recommended Actual/360 for Term SOFR loans, "the standard convention in US money markets", while allowing other fractions.17 The day count changes the per diem: on Corvane's principal at 10.00%, Actual/360 gives $786.64 a day and Actual/365 gives $775.86, a difference of $10.78 a day. If a letter does not say which it used, multiply the principal by the rate and divide by the stated per diem: $2,831,904.17 × 10.00% ÷ $786.64 = 360.

Lien releases and timing

A payoff buys a release. Under UCC 9-513, once nothing is owed and no commitment remains, the secured party must send or file a termination statement within 20 days after an authenticated demand from the debtor.27 Good payoff letters list the filings to be terminated. Commercial payoffs also have no federal clock for the letter itself: the seven-business-day rule in Regulation Z applies "in connection with a consumer credit transaction secured by a consumer's dwelling".5 Ask early, in writing, naming the notes, the payoff date and who may receive the letter.

Breakage: what a lender may charge when a SOFR loan is repaid or converted mid-period

In shortCredit agreements usually let the lender recover its funding loss when a SOFR loan is repaid or converted before its interest period ends, or when the borrower fails to take a loan it gave notice for. The charge is small next to the loan, depends on how far rates moved and how many days were left, and is easy to forget on a busy desk.

The ARRC's conventions note that agreements "may include language that compensates lenders for funding losses, e.g., losses sustained due to an intra-period prepayment, conversions or continuations or the failure to make borrowings or payments when due".17

The agreement filed with the SEC is a clear example: the borrower indemnifies each lender for loss from a default in paying a SOFR loan, from failing to borrow after giving notice, and from "the making of any payment of a SOFR Loan or the making of any conversion of any such Loan to a Base Rate Loan" on any day other than the last day of its interest period.16 Lawyers still argue about how to measure the loss after LIBOR; one 2022 analysis concludes that Term SOFR loans carry breakage "for the same reason LIBOR does".28

For a funding desk the work is to notice when a paydown or conversion lands mid-period, look up the clause, and tell the borrower before the payment, so the breakage is a known number on the day.

Fedwire's day, a bank's own release cut-off, and why the two are hours apart

In shortFedwire's business day opens at 9:00 p.m. Eastern the evening before and stops taking customer transfers at 6:45 p.m. Eastern. Banks set their own, earlier cut-offs for customers so that checks, call-backs and second approvals fit before the system closes. Once the receiving bank accepts a wire, it cannot be cancelled without that bank's agreement.

Under UCC 4A-106, "A receiving bank may fix a cut-off time or times on a funds-transfer business day", and a payment order received after it may be treated as received the next funds-transfer business day.18 So the effective cut-off for a borrower is the earliest of three: the agreement's notice hour, the bank's release cut-off, and Fedwire's own. Fedwire observes "all Saturdays, all Sundays and the holidays listed on the Federal Reserve Banks' Holiday Schedules".7

Two changes are coming. On October 9, 2025 the Federal Reserve Board decided to operate Fedwire and its settlement service on Sundays and weekday holidays, 22 hours a day, six days a week, with participation voluntary and implementation "in 2028 or 2029".12 And since July 2025 Fedwire messages use the ISO 20022 format, which carries richer, structured payee data than the old format.11

Business email compromise and payoff wires: the 2025 numbers and two court cases

In shortBusiness email compromise cost reporting victims $3.05 billion in 2025, the second-largest loss category in the FBI's report. Wires remain the most common way the money is taken. Courts have held that the receiving bank may pay on the account number, so the loss sits with whoever sent the money on bad instructions. A payoff funded by a new loan is exactly the kind of large, one-time payment to a third party these schemes look for.

Two cases a funding desk should know

The FBI's report adds two lessons. In April 2025 an Oregon city office lost over $6 million to an email-compromise wire; because the recovery team had flagged the same receiving account a month earlier, the receiving bank called the sending bank, which recalled the wire. And businesses reported more than $30 million of 2025 business email compromise losses involving AI.29

Call-backs that work: the number on file, the triggers, and two people on large wires

In shortCall back only on a number the bank verified before the request arrived. Decide in advance which changes require a call: a new bank, routing or account number, a different beneficiary name, a first payment to a payee, a payee unused for a long time, a letter that did not come through the payee's usual channel. Record who called whom, when, and what they confirmed, and have a second person approve large releases with that record in front of them.

FinCEN's red flags read like a description of the payoff in this guide's example: instructions from an email address "slightly altered by adding, changing, or deleting one or more characters", and instructions that "direct payment to a known beneficiary; however, the beneficiary's account information is different from what was previously used". Its advice is to verify "by using multiple means of communication or by contacting others authorized to conduct the transactions".8,9

New Jersey's regulator added the phone problem: "scammers are now deploying phone 'porting' technologies" against call-and-verify routines, so it recommends "a mutually agreed telephone number between the known parties" and code words.6

The call-back record a second approver should see

Two newer tools help without replacing the call. The Federal Reserve Banks' Payee Name Verification lets a bank "verify an intended payee's name with an account (routing and account number) prior to issuing a payment", on any payment rail.15 It confirms that a name matches an account. Whether that account belongs to the creditor you mean to pay still takes the call. And the 2021 authentication guidance expects stronger controls on high-risk transactions, which large third-party wires are.10

Where draws and payoffs go wrong on a funding desk, from a miscounted holiday to a rerouted wire

In shortMost errors come from reading the right clause on the wrong day: counting the wrong calendar, using last month's borrowing base, missing a default, trusting the signer on an old list. The expensive ones involve money leaving to someone other than the borrower. Each has a specific check, and the checks only work if they run every time, including at 3:50 p.m.

Which funding checks software can run, and what the 2026 guidance leaves to people

In shortMost of the checking is rules and arithmetic once the request has been read: business days, minimums, availability, a field-by-field match against verified instructions. Reading free-text emails and scanned forms is where AI helps and where it must be tested. Releasing money, making the call-back and deciding on a default stay with people.

On April 17, 2026 the Federal Reserve, OCC and FDIC replaced SR 11-7 with revised model risk guidance, SR 26-2 (OCC Bulletin 2026-13, FDIC FIL-15-2026), which emphasizes "a risk-based approach to model risk management that is tailored" to each bank's model use.14

Deterministic checks such as date arithmetic and field comparison are controls, tested by running known cases through them. A tool that reads emails and letters with AI needs its own accuracy testing on your documents, and its outputs should be visible to the person who releases.

SR 26-2 places generative AI, and AI that acts on its own, outside its scope and leaves them to the bank's wider risk management and governance; its principles still apply to vendor models.14 Nacha's 2026 ACH rules take the same risk-based line and, in Nacha's own answers, prescribe no specific processes.13

The money that moves: Fedwire volumes, business loans and syndicated commitments in 2025–2026

In shortFedwire settled 217 million transfers worth about $1.15 quadrillion in 2025, an average of $5.28 million each. US banks held about $2.96 trillion of commercial and industrial loans in September 2026, and large syndicated commitments reached $6.9 trillion. Nobody publishes how many draw and payoff requests that means; the volume of wires and loans is the best public proxy.

The commercial and industrial loan series was broken in 2025 when loans to nondepository financial institutions were reclassified out of it, so year-on-year comparisons across that change mislead. No public source counts notices of borrowing, payoff requests or rate elections; a desk can count its own from its inbox and loan system in a week.

How a draw or payoff moves through a funding desk today, and the lookups that fill each step

In shortA request passes through a servicing officer who reads and keys it, a funding specialist who checks and releases it, a supervisor who approves large wires, and a relationship manager who hears about anything held. Most of the time goes to looking things up in five places: the agreement, the loan system, the certificates, the signer file and the wire file.

Who reads, checks and releases a draw or payoff

One third-party payoff: four people, five systems

About 50 minutes of lookups per hand-checked request

At month and quarter ends, draws and paydowns bunch together, and every request is wanted the same day. A request that takes 50 minutes by hand means a desk of three people can clear roughly 25 to 30 in a working day before the cut-off, and the last ones of the day get the least attention.

Shared mailbox, loan administrator or notice-processing software

The Marlow payoff on screen: a red wire check at 1:42 p.m., a released wire at 2:16 p.m.

In shortThis is the example from the top of the page, inside the product. Six agents read and check every request as it lands and put it on one release console. Renata Alvarez, the funding and payments specialist, sees one red row: a payoff whose wire instructions differ from the verified file. She calls the payee on the number on file, the fake letter is replaced, every check turns green, Theo Marsh co-approves, and the money goes to the right account 1 hour 44 minutes before the cut-off.

1

Twelve requests, nine checks each, one clock

At 1:42 p.m. Renata's home screen is the release console. A clock shows 2 hours 18 minutes to the 4:00 p.m. cut-off; a ribbon marks each request at the minute it arrived. Each request is a row, each check a square: read, loan, notice, minimum, availability, conditions, signer, wire, call-back.

Four requests worth $7,146,310.42 are ready or nearly ready, three worth $2,040,000 are held, one has been released. The Marlow payoff row is red: "Account changed since last request — call-back required". Its release button shows a lock and the number of open checks.

2

The payoff letter, read as it landed

Corvane's payoff letter arrived by email at 11:58 a.m. The request reader took principal $2,831,904.17, interest $12,486.25, the $1,920.00 fee, the total of $2,846,310.42 good through October 13 and the $786.64 per diem, and matched them to Marlow's notice of borrowing of Friday, October 9 at 10:22 a.m. and to delayed-draw term loan 4410-2287.

Six numbered notes sit beside the letter: two that tie out, and four that do not, including the line announcing an account "updated effective October 1, 2026" and a phone number that is not the payoff desk on file.

3

Seven checks pass; the wire check turns red

Notice was met: one business day before, by noon, under section 2.2(c) of the sample agreement. The amount is above the $500,000 minimum and inside the $3,000,000 delayed-draw tranche. All four conditions to the draw are met, including the payoff letter and authorization to file UCC-3 terminations. Dana Thornbury, Marlow's CFO, is on the signer list.

The wire instruction guard compared the letter with the verified payee directory field by field. Every earlier payment to Corvane went to Tessaro Bank, account ending 4471, on file since March 3, 2025. The letter asks for Larkmoor Savings Bank, account ending 9023, from a domain registered on October 6, with a phone number that is not on file and a PDF made in a word processor at 11:41 a.m., outside Corvane's payoff portal.

4

A call-back on the number already on file

At 1:49 p.m. Renata opens the call-back log. The number to call comes from the verified payee directory: Corvane's payoff desk, (614) 555-0148, verified March 3, 2025. The number in the letter, (614) 555-0193, is struck through and cannot be logged.

Lena Brandt at the payoff desk confirms the Tessaro account has not changed and that Corvane sent no letter today. Renata records the answer; a fraud report opens, and Corvane is asked to re-issue the payoff through its portal.

5

Re-issued, re-checked, approved twice, released

At 2:06 p.m. Corvane's re-issued letter arrives through its portal, reference CVF-PO-77810: the same $2,846,310.42, to Tessaro Bank. The agents read it and run every check again. The wire now matches the file and the call-back is on the record, so the release button opens, for two people, because the amount is above $1,000,000.

Theo Marsh, the operations supervisor, approves at 2:14 p.m.: "Call-back is on the record. Go." Renata releases at 2:16 p.m., inside the good-through date, so no extra day at $786.64. The fraud report, the call and both approvals stay on the request's record.

The sample day's log shows a median of 4 minutes from a request's arrival to all nine checks done. The solution's design targets are 4 minutes from arrival to all checks done, and every changed or new wire instruction called back on the number on file before release. Both are targets, to be measured on your own requests.

Four more requests that did not go through, and the screens behind them

In shortThe payoff was the dangerous request. The others show the ordinary failures a desk sees every week: a SOFR notice one business day short, a draw above the borrowing base, a draw during a default, a signer removed from the list. Each failed check names its clause or record and turns into a note or a referral that offers what will work.

Select any screen to open it larger. The log and the late-notice check are shown cropped only.

What each of the six agents checks, and who releases and co-approves the money

In shortEach agent has one job and limits it never crosses. None of them releases money, waives a term, dials a number from a request or edits the verified payee directory. A person releases every payment; above $1,000,000 a second person approves with the same evidence on screen; held requests go to the relationship manager.

Six agents that read notices and payoff letters and run the checks

The specialist releases; a supervisor co-approves above $1,000,000

The release button stays locked while any check is open, and that setting cannot be turned off. A call-back that says "not genuine" opens a fraud report. Who read, checked, called, approved and released is kept with times, against the cut-off.

The funding desk working a 4:00 p.m. cut-off

The notices, letters and records the checks read, and the release instructions and notes they hand back

In shortIt reads the requests borrowers already send, checks them against the agreements and records the bank already keeps, and hands a person either a release instruction or a drafted note. The loan system, the wire system and the payee directory stay the systems of record.

Mailbox, loan system, wire platform and payee directory

For each, check whether it has an API, a file feed, or only screens, and who owns it.

Your loan system, wire controls and payee directory stay in charge

Staff minutes, per diem and diverted payoffs: the three costs of checking requests by hand

In shortThree costs matter: staff minutes on every request, per diem and breakage when a release slips, and the rare payoff wired to a fraudster, which can cost more than a year of the other two. Nobody publishes how often desks miss cut-offs or how many requests they handle, so the numbers that decide the case are yours.

Staff minutes, late releases and missed breakage on your desk

Diverted payoffs, waiting borrowers and draws made in default

What checking requests automatically could return for your funding desk

In shortPut in your own numbers. The calculator starts from a published clerk wage and asks you for the rest: how many requests you handle, how long they take, how often a release slips, and what the tool costs. It shows the payoff fraud you carry separately, because that number depends on events too rare to average.

Staff minutes, per diem, breakage and fraud: where request checks pay

Your request volume, minutes and per diem, calculated

A desk handling 25 requests a working day, about 6,000 a year, covers $100,000 a year on staff time alone only if it saves about 30 minutes a request (6,000 × 30 ÷ 60 × $34 = $102,000). Most of the case for a smaller desk rests on payoffs released on time and changed instructions caught, so measure those before you buy anything.

How ready your funding desk is to have every request checked automatically

In shortPick the answer closest to your desk today. Eight questions score 0 to 2; the last is for reflection. The meter adds up your score as you go, and each question says why it matters and what a strong answer sounds like.

Funding desk bands: write the rules, replay requests, plan the desk

Business-day calendars, wire checks, release locks: sixteen questions for any loan notice or payoff software vendor

In shortAsk every vendor the same questions, us included. The answers show what the tool reads, how it counts business days, what it compares wire instructions against, whether a release can go out with a check open, and how you would measure it on your own requests.

We found no published independent test of any loan notice or payoff-checking tool, as of October 2026. A planted-failure test on your own requests is the fairest comparison, and the same test measures your current process.

Ten weeks to a decision: replay requests you already funded, then run live

In shortMeasure first, then replay past requests with failures you planted, then run live with your people releasing every payment, and decide with three numbers. None of these steps commits you to a vendor.

1. Time a week of requests, by step, and count releases after the cut-off and call-backs made.
2. Write down your rules: cut-offs, notice defaults, approval limits, call-back triggers, and which records each check uses.
3. Gather three months of past requests with their agreements, certificates and wire records. Copy twenty and plant failures: late notices, stale certificates, removed signers, changed accounts.
4. Run live in parallel for four weeks, with your people releasing every payment as today.
5. Decide with three numbers: catches by check type, false alarms on clean requests, and minutes from arrival to release.

Planted failures, false alarms and minutes to release

Notice periods, per diem, Fedwire holidays and payoff fraud: the questions people ask

In shortThe questions funding teams and buyers search for most, each answered on its own.