Why it matters
MAC clauses are the silent killer of venture-backed companies. A drop in MRR, a delayed Series B, a key customer churn, a CEO health event — any of these can trigger the clause if the lender decides to use it. When SVB called MAC defaults during the 2022–23 downturn, founders had 30 days to repay $5M–$20M loans they no longer had the runway to service. The bank gets paid, the equity gets wiped. Most founders have never read this clause carefully because their lawyer told them it's 'standard.' It is standard. That's the problem.
How to negotiate
Push for an objective MAC definition tied to specific, measurable triggers (e.g. 'a 40% drop in trailing-12-month revenue') rather than discretionary language ('in the lender's reasonable judgment'). Ask for a 90-day cure period instead of immediate acceleration. If the lender refuses both, ask for the MAC clause to be removed entirely in exchange for a higher interest rate or fee — many will agree, because they price MAC optionality into the deal whether or not they ever use it.
Example language
How this clause typically appears in a debt agreement or note. Read it carefully — the language that triggers default is often buried in routine paragraphs.
An 'Event of Default' shall include the occurrence of any event or condition that, in the Lender's sole and reasonable discretion, has had or is reasonably likely to have a material adverse effect on the business, operations, condition (financial or otherwise), or prospects of the Borrower.
TURNSHEET provides intelligence, not legal advice. This page describes typical market behaviour and common negotiation tactics; your specific facility may have nuances that change the analysis. Always review your debt documents — including covenants, intercreditor agreements, and personal guarantees — with qualified legal counsel before signing.