Business Revenue Financing for Business Credit

Key Features of Revenue-Based Lending

• Fixed Interest & Payments: Enjoy predictable repayment terms with set interest rates and fixed payment amounts throughout the loan term.
• No Collateral Required: Loans are unsecured, so you won’t need to pledge business assets. A personal guarantee is still required.
• Daily Business-Day Payments: Repay your loan with small daily payments, collected only on business days to align with your cash flow.
• Flexible Term Options: Choose from 6, 9, 12, 15, or 18-month terms to suit your business needs and repayment ability.

Revenue-based lending offers straightforward, short-term funding with manageable daily repayment plans.

Benefits of Revenue-Based Lending

• Lower Cost Alternative: Typically, up to 50% cheaper than a Merchant Cash Advance.
• No Processor Change Needed: Continue using your current credit card processor—no switch required.
• Tailored Funding Options: Applicants are matched with the best program based on their business credit profile.
• Builds Business Credit: Timely repayment is reported to business credit bureaus, helping you establish a strong business credit profile.
• Tax-Deductible Interest: Loan interest may be written off as a business expense.
• Insightful Business Reports: Receive Business Performance Reports to track your company’s financial health.
• Real-Time Payment Tracking: Access a personalized online portal to monitor your repayment progress.
• No Enrollment Needed: No extra signup required for credit reporting services.
• Simple Repayment: Payments are automatically debited based on your revenue.
• Quick Access to Capital: Funding can be secured in less than two weeks.
• Unsecured Loans: No collateral is needed.
• Short-Term Flexibility: Loan terms range from 3 to 18 months with flat, fixed rates.
• Seasonal Business Friendly: Ideal for businesses with fluctuating income.
• Flexible Loan Amounts: Borrow between $5,000 and $150,000.

Qualification Requirements for Revenue Lending

To qualify for revenue-based lending, businesses must meet a combination of financial, transactional, and credit standards:

• Bank & Merchant Statements: Submit the most recent 4 months of complete bank and merchant processing statements. Seasonal businesses must provide 12 months.
• Business Age: Must have been operating for at least 1 full year.
• Revenue: Must generate at least $150,000 in gross annual sales.
• Transaction Activity: Should average over 30 transactions per month. Some lenders also require $10,000+ in monthly credit card sales.
• Transaction Size: The average sale should be less than $500.

Credit & Business History Requirements

• Credit Score: A personal credit score above 500 is necessary.
• Credit Health: No derogatory marks within the last 12 months.
• Bankruptcy: Applicants must not have a history of bankruptcy.
• Judgments & Collections: No unpaid judgments or active collections.
• Business Record: A clean history with no unpaid or late business loans is required.

Business Revenue Lending Overview

Revenue-based lending is designed to meet the needs of small businesses by providing accessible, short-term working capital. Here’s what you need to know:

• Multiple Lending Partners: Access to a wide network of lenders increases your chances of approval.
• Bank Balance Considered: Lenders review your bank account health, not just credit scores.
• Credit Card Acceptance Helps: Businesses that accept credit cards typically qualify more easily.
• Time in Business Matters: Longevity and stability of the business are key approval factors.
• Best for Main Street Businesses: Ideal for businesses with high foot traffic and low-ticket sales needing fast funding.

Perfect for High-Volume Industries

Industries like restaurants, salons, pharmacies, pet care, grocery stores, medical clinics, apparel shops, and furniture or gift stores often qualify due to their frequent low-dollar transactions.

Typical Business Funding Needs

Small businesses usually seek around $30,000 annually for equipment, inventory, advertising, or renovations. Bank loan approval rates hover at just 30%, pushing many owners to rely on personal credit, home equity, or retirement funds.

• Non-Credit Card Merchants: May qualify for $5,000 to $75,000 with terms of 6–9 months.
• Credit Card Merchants: Can access $5,000 to $150,000 with 6–18 month repayment terms.

Revenue Lending Pricing Overview

Revenue-based lending uses a factor rate model rather than traditional interest rates, making it similar in structure to invoice factoring.

• Not Interest-Based: Repayment is not calculated using APR or compound interest.
• Factor Rates Apply: Loans are priced using a factor, generally ranging from 1.18 to 1.39, depending on the business’s risk profile.
• High-Risk Pricing: For higher-risk applicants, factor rates can go as high as 1.42.
• Comparable to Factoring: The pricing structure aligns closely with factoring, where repayment is a fixed multiple of the loan amount rather than a percentage interest over time.

This straightforward pricing model makes it easy to understand total repayment costs from the start.

Revenue Lending: Ideal Borrower Profiles

Lender Sweet Spot

Lenders prefer businesses that meet these core criteria:

• Medium-risk borrowers can qualify for up to $100,000 through traditional lending programs.
• 3+ years in business
• Annual revenue exceeding $300,000
• Average bank balance of $5,000
• Personal credit score above 600
• Loan terms typically range from 6 to 12 months
• Requests of $50,000 or more require submission of both business and personal financials.

Preferred / Platinum Borrowers

• Can receive up to $150,000 with terms up to 12 months, or up to $100,000 with 12–18 month terms
• Must have a credit score above 600
• Lower overall risk profile is the key factor for approval

High-Risk Borrowers

• Qualify for up to $50,000 through alternative programs
• Must have at least 2 years in business
• Max term of 9 months
• Typically have credit scores under 600
• Considered higher risk due to limited credit or unstable financials

Revenue Lending Underwriting Process

The underwriting process is streamlined to deliver fast funding with thorough evaluation. Here’s how it works:

1. A Finance Officer pre-qualifies the applicant and submits a completed application, including the most recent 4 months of full bank and merchant processing statements. For loans over $50,000, additional documents such as signed tax returns, profit & loss statements, and a balance sheet may be required.
2. A loan decision is typically made within 48 hours, and the applicant is matched with the appropriate loan type—Traditional, Standard, or Bank Only—based on a pre-screen.
3. If needed, the lender will request any additional supporting documentation.
4. The complete application is forwarded to underwriting for a detailed review and grading report, which includes loan recommendations.
5. The borrower selects the preferred loan option.
6. The origination documents are drafted.
7. The applicant completes and returns the signed documents with any final paperwork.
8. Funds are disbursed within two business days of final approval.

Renewal Loans & Business Insights

Renewal Loans offer returning clients faster access to working capital without having to repay their original loan fully.

• Down Payment: A renewal loan can begin once 55% of the original loan has been paid off.
• Client Performance: If the borrower has maintained a strong repayment record, they may qualify for renewal funding equal to their initial loan amount.
• Initial Funding Match: Renewal loans require a down payment using the new funds to ensure the total borrowed amount doesn’t exceed the original loan.
• Access to Additional Capital: This strategy helps clients avoid delays and respond quickly to new or unexpected business needs.

Other Important Features:

• Payment Methods: Clients can choose between ACH or a Transfer Account (lockbox) for automated payments from credit card receipts.
• Business Performance Reports: These reports offer insights into how lenders view the business’s financial strength and are available to the Finance Officer or Account Director for client review.
• Preliminary Review: Available once underwriting conducts an initial assessment.
• Grading Report: This document highlights credit health and pinpoints areas for potential credit repair and improvement, empowering clients with clear next steps.

High-Risk Industries & Required Documentation for Revenue Lending

Revenue lending is not available to businesses in certain high-risk industries due to elevated default rates or regulatory concerns.

High-Risk Industries Include:

Financial Services

• Mortgage lenders, credit repair services, wire transfers, collection agencies, check cashing, and factoring companies.

Vice-Related Businesses

• Adult entertainment, gambling, drug paraphernalia, firearm sales, and fortune telling.

Dealerships

• Auto, motorcycle, ATV, motorhome, and boat dealerships.

Investment & Service Sectors

• Real estate brokers, timeshare companies, insurance agents, payroll companies, accountants, and financial transaction processors.

Other Restricted Fields

• Not-for-profits, fraternities, daycares, attorneys, vitamin retailers, funeral homes, transportation services, marinas, travel agencies, schools, gyms, and recreational services.

Underwriting Requirements:

To qualify, applicants must provide:

• Proof of U.S. citizenship (driver’s license, Social Security card, voter ID, birth certificate, green card, or Medicare card)
• Signed application and agreement
• A voided business check
• Full federal tax returns (business and personal, depending on structure)
• Proof of business premises (three-year lease or ownership deed)

These documents help assess legitimacy, creditworthiness, and overall business stability.

Alternative Revenue Option: Purchase of Future Receivables

This revenue financing option is ideal for businesses with a high volume of small transactions, though some flexibility is allowed depending on the situation.

Funder Purchases

Instead of a traditional loan, the funder buys future receivables at a discounted rate. Repayment is made through manageable daily payments drawn directly from the business revenue.

Exception

Initial funding limits can be increased up to $100,000 if the client provides a valid contract with a reputable company that demonstrates annual sales potential exceeding $150,000.

Use of Funds

Funding amounts can increase if the intended use is focused on business growth, such as expansion or new equipment.

Origination Fees

There are no origination fees, unlike many competitors in this space, making it a cost-effective financing solution.

Qualifications

• Business Duration: Must have been operating for more than one year.
• Physical Location Required: Internet-only businesses are not eligible; a physical location is necessary—even if it’s home-based.
• Sales Requirement: Annual sales must be $150,000 or more.

Credit Criteria

• Personal Credit: Minimum FICO score of 520; all business owners must sign the application.
• Bankruptcy: No open bankruptcies; discharged bankruptcies are acceptable.
• Tax Liens: Must be on an active payment plan.
• Existing Debt: Business debt balances should not exceed 40% of the requested funding amount. Payoff confirmations are required to ensure outstanding debts are settled.

This option provides a flexible and accessible way to fund growth without traditional loan structures.

Underwriting Process for Revenue Lending

The underwriting process is designed to be efficient, with funding potentially completed in as few as seven days.

• Within 48 hours of receiving the application and bank statements, a preliminary proposal or offer with initial numbers is generated.
• Once signed contracts are submitted, the final review typically takes an additional three to four days. During this time, underwriters may request further documents or information to complete the assessment.
• The full package is sent to underwriting for a comprehensive review, identifying any missing documents or details required for closing.
• Additional information submitted during this phase helps move the application toward closing.
• Underwriting categorizes applications as either Fast Track or Complex Track. Fast Track loans generally fund within five days of receiving contracts, while Complex Track loans require a more thorough review and may take longer.
• If needed, funders conduct a direct client interview by phone to address specific questions or concerns.
• The final funding decision and status are updated in the CRM through the Deal Status Report.
• A Welcome Call is scheduled by underwriting the day before funding to prepare the client.
• Funding is completed through either ACH or wire transfer, ensuring a smooth and secure transfer of funds to the client.

Revenue Lending Programs and Underwriting Requirements

Premier Program

• Funding ranges from $10,000 to $75,000
• Minimum annual sales of $250,000
• Requires a minimum FICO score of 650
• At least 20 deposits and 30 transactions per month

Standard Program

• Funding ranges from $5,000 to $75,000
• Minimum annual sales of $250,000
• Accepts lower FICO scores starting at 520
• Requires at least 20 deposits and 20 transactions monthly

Underwriting Requirements

• Completed application and authorization to release information forms
• Last 4 months of full bank and merchant processing statements; 12 months if seasonal
• For businesses not accepting credit cards, provide 6 months of bank statements
• Loans over $35,000 may require prior year’s business and personal tax returns, profit and loss statements, balance sheets, plus year-to-date financials
• Documentation of lien and judgment releases, payment plans, previous landlord details if relocated
• Franchise agreements, business licenses, and divorce settlements when applicable

Benefits

• Ideal for accessing capital quickly with competitive, fixed repayment terms
• Flexible for seasonal businesses
• Loan amounts range from $5,000 to $150,000
• Terms span 3 to 18 months, offering manageable short-term financing options