> ## Documentation Index
> Fetch the complete documentation index at: https://docs.layerfi.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Flex loans

A flex loan is a business term loan: the business borrows a fixed amount and repays it, plus a fixed fee, over a set period. Repayment is collected automatically as a percentage of the business's sales (the *repayment rate*), and each period has a *minimum payment*. If the amount withheld from sales doesn't meet the minimum by the end of a period, the remainder is debited from the business's bank account.

<Note>
  The sales-withheld portion of a flex loan repayment works the same way as a [merchant cash advance](/guides/loans/merchant-cash-advances). The difference is that a flex loan is a loan with a repayment term and a minimum payment, so it can also be repaid by direct bank debits.
</Note>

## Step 1: Create the loan

Create a loan with `loan_type` set to `FLEX_LOAN`, `original_principal` set to the financed amount, and `fee_percentage` set to the fixed fee. Disburse the full amount up front with a single `DISBURSEMENT` [proceed](/api-reference/loan/loan#loan-proceed-object). Set an `external_id` so you can reference the loan later without storing Layer's IDs.

The `fee_percentage` is the fixed fee expressed as a percentage (for example, `"15"` for a 15% fee on a \$20,000 loan).

```bash Request theme={null}
curl --request POST \
  --url https://sandbox.layerfi.com/v1/businesses/{businessId}/loans \
  --header 'Authorization: Bearer <token>' \
  --header 'Content-Type: application/json' \
  --data '{
  "loan_type": "FLEX_LOAN",
  "external_id": "flex-001",
  "display_name": "Flex loan",
  "origination_date": "2024-03-01",
  "original_principal": 2000000,
  "fee_percentage": "15",
  "proceeds": [
    {
      "loan_proceed_type": "DISBURSEMENT",
      "amount": 2000000,
      "date": "2024-03-01",
      "method": "ACH"
    }
  ]
}'
```

## Step 2: Record repayments

Each repayment is a [loan payment](/api-reference/loan/loan#loan-payment-object) split into `PRINCIPAL` and `FEE`. As with MCAs, you can omit `splits` and Layer derives them from the loan's `fee_percentage` (`principal = amount / (1 + fee_percentage / 100)`, fee = remainder); provide explicit `splits` to override.

### Repayments withheld from sales

When a repayment is withheld from the business's sales, record it exactly as you would for a merchant cash advance: attach it to the [payout](/api-reference/customer-payouts/payout) it was deducted from, or record it as a `LOAN_REPAYMENT` fee on the [invoice payment](/api-reference/v1/record-a-payment) it was withheld from. See [Record repayments](/guides/loans/merchant-cash-advances#step-2-record-repayments) in the MCA guide for both flows.

### Minimum payments debited from the bank

When a period's sales don't meet the minimum payment and the difference is debited directly from the business's bank account, record that as a standalone [loan payment](/api-reference/v1/loans/create-loan-payment):

```bash Request theme={null}
curl --request POST \
  --url https://sandbox.layerfi.com/v1/businesses/{businessId}/loans/payments \
  --header 'Authorization: Bearer <token>' \
  --header 'Content-Type: application/json' \
  --data '{
  "loan_external_id": "flex-001",
  "external_id": "flex-001-minimum-2024-03-31",
  "amount": 115000,
  "date": "2024-03-31",
  "method": "ACH"
}'
```