Most owners decide what they want, ask for it, and find out later that the number was never theirs to pick.
Funding partners do not start with what you need. They start with what your business can carry, and they get there with arithmetic you can run yourself in about ten minutes. We read files all day. This is what we read.
Not revenue on a tax return. Not what the equipment costs. Deposits into your business bank account over the last three months.
Almost every funding product is sized off that one figure. Take a business depositing $80,000 a month, so $960,000 a year, and run the common rules.
| Revenue-based funding roughly 1x to 1.5x monthly deposits | $80,000 to $120,000 |
| Business line of credit roughly 10% to 20% of annual revenue | $96,000 to $192,000 |
| Term loan or SBA sized off profit, not revenue | see below |
Revenue-based funding and lines move fast because the maths is fast. Deposits in, multiple applied, answer out. That speed is the product.
A term loan or an SBA loan asks a different question. Can the business cover the payment with room left over? Partners generally want about $1.25 of profit for every $1 of annual loan payments.
So if that same business nets $120,000 a year, divide by 1.25. It supports roughly $96,000 a year in payments, or $8,000 a month.
| 5 year term at about 11.5% | about $364,000 |
| 10 year term at about 11.5% | about $569,000 |
Same business. Same bank statements. Roughly $100,000 on one product and several hundred thousand on another. Nothing changed except the structure, which is most of what we do.
Time in business. Under two years narrows the list sharply. Past two years, most partners will look.
Consistency of deposits. Ten steady deposits a month reads better than one large one. Lumpy revenue reads as risk even when the annual total is strong.
Negative days. Days the account went below zero. A few is survivable. A pattern is usually what ends an approval.
Existing positions. If you already carry advances, this is the biggest limiter on the list. Each one takes a daily or weekly bite, and partners subtract that before deciding what is left.
Credit. It matters most for the cheap products and least for the fast ones. Weak credit does not remove you from consideration. It moves you toward the expensive end, which is exactly where you want someone telling you the truth.
Owners ask how much. The more useful question is how much per month.
Take the same $80,000 through two structures.
| Revenue-based, 1.35 factor over 10 months | $108,000 back |
| Term loan, 5 years at about 11.5% | $105,565 back |
Nearly identical in total cost. Now look at what leaves the account each month.
That is why businesses with real revenue still get into trouble on fast money. The total cost was survivable. The daily remittance was not.
Revenue-based funding and short-term capital are the most expensive things we can arrange. Some owners should not take them, and we would rather say so before an application than after a default.
If the money is funding something that pays back over years, a build-out, a hire, a second location, matching it to a ten month product is how a reasonable decision turns into a cash flow problem. If your own bank will do it in three weeks and you can wait three weeks, take the bank. If you already carry two positions, adding a third rarely ends well and we will usually tell you to clear one first.
Fast money earns its cost in one situation: the return arrives sooner than the payments do. Inventory you will turn in sixty days against a high margin sale. A contract already signed. Equipment that starts billing the week it lands.
Pull your last three months of business bank statements. Average the monthly deposits. That average is roughly your revenue-based number. Ten to twenty percent of the annual figure is roughly your line. If you know your net profit, divide by 1.25 and again by twelve for your monthly payment capacity.
Now you have a range, and you can tell whether an offer in front of you is reasonable.
If you would rather someone ran it against actual partner criteria, that is the job. One intake, read properly, taken to the partners most likely to fund a file like yours. If the answer is that your own bank is the better move, we will say that too.