To what is a payment first credited when received for the Bumble Roofing promissory note?
Bumble_Roofing Franchise · 2025 FDDAnswer from 2025 FDD Document
All payments, as of the date they are received, will first be credited to any late charges due; the balance, if any, will then be credited to the outstanding interest balance; and the balance, if any, will then be credited to the outstanding principal balance.
Source: Item 23 — RECEIPT (FDD pages 53–188)
What This Means (2025 FDD)
According to Bumble Roofing's 2025 Franchise Disclosure Document, payments received on a promissory note are first applied to any outstanding late charges. If there is a remaining balance after covering late charges, the payment is then credited towards the outstanding interest balance. Finally, any remaining amount after addressing late charges and interest is applied to reduce the outstanding principal balance of the note.
This means that if a Bumble Roofing franchisee makes a late payment, the penalty fees will be satisfied before any of the payment goes toward reducing the principal owed. This is a typical practice in lending agreements, as it ensures that any penalties or outstanding interest are addressed before the principal balance is reduced.
For a prospective Bumble Roofing franchisee, this highlights the importance of making timely payments on any promissory notes. Late payments will not only incur additional charges but will also delay the reduction of the principal amount owed, potentially increasing the overall cost of borrowing. Franchisees should factor in these potential costs when managing their finances and ensure they have a system in place to avoid late payments.