Business loans based on revenue

Published minimums, checked

Before you send your bank statements anywhere

1. Work out your true monthly deposits, not your invoiced revenue. The lender is reading what arrived, and transfers between your own accounts do not count.
2. Check the published floors. Two lenders publish ten thousand dollars a month; one publishes fifteen thousand; the highest published annual figure here is three hundred and fifty thousand dollars.
3. Decide what repayment frequency you can live with. Daily and weekly sweeps are normal in this product and they change what a quiet fortnight feels like.
4. Convert every offer into a total cost and a weekly payment before comparing. Factor rates and terms are not comparable in the form they are quoted, and two offers that look a hundred points apart can cost the same or the reverse once the term is in the arithmetic. Do the conversion on paper before you choose.

What the lender is reading

Bank statements, and very little else. The underwriting looks at average daily balance, the number of days the account was negative, the consistency of deposits month to month, and whether there are other lenders already sweeping the account. That last one matters more than borrowers expect: an existing advance visible in the statements is often the single reason a second application is declined, because the lender can see how much of the revenue is already spoken for. Clean the account for three months before you apply if you can, and disclose existing facilities rather than letting the statements do it for you.

Revenue-based and merchant cash advances are close cousins

A merchant cash advance is a revenue-based facility that takes its percentage from card receipts specifically, so it suits a business paid at the till. A general revenue-based facility sweeps the bank account and suits a business paid by transfer. The underwriting logic and the price structure are the same, and both are usually quoted as a factor rate rather than an interest rate. Two lenders in this record keep a live merchant cash advance page and both publish a five hundred credit score floor, which is the lowest published bar on the site.

When the flexibility is real and when it is not

A facility repaid as a percentage of takings genuinely flexes with trade, and that is worth paying for in a seasonal business. A facility repaid as a fixed daily amount does not flex at all, whatever the marketing says, and in a quiet week it behaves exactly like a fixed instalment landing five times instead of once. The distinction is in the contract rather than the sales conversation, so read which of the two you are being offered before you sign, and ask what happens in a week when the sweep cannot be met.

Common questions

How much revenue do I need for a revenue-based loan?

The lowest published floors in this record are ten thousand dollars a month, published by two lenders, and one lender publishes a hundred thousand dollars in annual revenue. The highest published requirement here is three hundred and fifty thousand dollars a year. Every one of those is a floor and not an approval.

Do revenue-based lenders check credit?

Yes, but as a filter rather than the decision. The published credit floors in this record run from five hundred to six hundred and twenty-five with a median of six hundred, and above that line the bank statements decide the size and the price.

Is a revenue-based loan cheaper than a merchant cash advance?

Not reliably. They are the same underwriting with a different collection mechanism, and price varies more between lenders than between the two products. Convert both to a total cost of borrowing and a payment per week and compare those numbers rather than the labels.

By borrowing product

• merchant cash advance: what the lenders who offer it actually require
• equipment financing: what the lenders who offer it actually require
• invoice factoring: what the lenders who offer it actually require