How do I know if my business qualifies for revenue based funding?

I was on the phone just yesterday with a guy who runs a pretty successful HVAC company down in Texas. He was stressed out. And I mean stressed. He’d just walked out of his local bank branch where he’s had his business accounts for ten years.

He went in asking for a modest line of credit to buy inventory before the summer rush hits. They told him no. Why? Because he had a hiccup on his personal credit report from three years ago and didn't have enough tangible collateral to pledge. The fact that his business was doing $40,000 a month consistently didn't seem to matter to them.

I hear this story probably five times a week. It’s frustrating.

But that’s exactly where revenue based funding (RBF) comes in. It’s a different beast entirely. We aren’t looking at you through the same lens as the big banks.

If you're reading this, you probably need capital, and you probably don't want to jump through hoops just to get a “maybe” three weeks from now. So, let’s break down how you actually know if you qualify. I’m gonna be real with you about what we look for when a file lands on my desk.

The "Revenue" is the main event

The name kind of gives it away, right? Revenue based funding depends on... your revenue. We look at your gross sales. We want to see that money is actually flowing into the business.

Here’s the thing: we don't necessarily care about your net profit as much as a bank does. We know that small business owners write things off. You buy equipment, you pay for fuel, you employ people, maybe you pay yourself a salary. Your tax returns might show a loss even if you’re killing it. That’s fine.

What we need to see is deposits. Usually, at LoanQuail, we are looking for businesses that generate at least $10,000 to $15,000 in gross monthly sales.

If you're depositing $2k one month and $8k the next, it's going to be tough. But if you are consistently putting $15k, $20k, or $50k into your business bank account every month, you’re already 90% of the way there. We view that cash flow as the health of the business.

Does my credit score actually matter?

Short answer: Yes, but not as much as you think.

Look, if you have a 750 FICO, that’s great. It might get you a slightly lower factor rate or a longer term. But I’ve funded plenty of merchants with credit scores in the 500s. I had a client recently, a restaurant owner, who wrecked his credit during the pandemic just trying to keep the doors open. His personal score was like a 520. But his restaurant was packed every night and he was depositing $60k a month.

We funded him. No problem.

Banks lend based on your past history. Revenue based funding is based on your current performance and future potential. If the cash flow supports the payment, the credit score becomes a secondary detail. So don't let a bad score stop you from checking if you're eligible.

Time in Business

We need to see a track record. We can't fund a startup that hasn't made a sale yet. It's just too risky. Different lenders have different rules, but generally, we look for:

• At least 6 months in business. Some programs require a year, but 6 months is usually the minimum to show us a trend.
• Consistent ownership. If you just bought the business last month, we often have to treat it like a new startup unless you were already a partner.

Honestly, if you opened your doors three months ago, you might need to wait a bit. Build up those bank statements. Once you hit that six-month mark, give us a call.

The Deal Killers (What makes us say "No")

I want to save you some time here. While approval rates for RBF are way higher than bank loans, we don't approve literally everyone. There are certain things on a bank statement that make us nervous.

Negative Days

If your bank account balance is negative five days out of the month, that tells us you’re struggling to manage cash flow. It makes it hard for us to believe you can handle a daily or weekly payment. We like to see a healthy average daily balance. It doesn't have to be huge, but it shouldn't be zero.

NSFs (Non-Sufficient Funds)

Bounced checks. This is a big one. If I look at a statement and see 10 NSFs in a month, it’s a red flag. It usually means you're over-extended. A couple here and there? We can talk about it. Maybe a vendor pulled a payment early. We get it, stuff happens. But chronic NSFs are a problem.

Stacking

This is industry talk for taking out too many advances at once. If you already have three other funding companies withdrawing from your account every day, adding a fourth one is probably going to break the camel's back. We want to help you grow, not put you out of business. We’ll look at your current debt load to make sure you can actually afford the new funding.

The Paperwork is Minimal

One of the best things about this type of funding—and why I enjoy working here rather than a bank—is the speed. I don't need your life story. I don't need a 40-page business plan. I don't need your tax returns from 2019.

To see if you qualify, we typically just need:

1. A simple one-page application (basic info like business name, owner name, start date).

2. The last 3 to 4 months of business bank statements.

That's it. Seriously. We run the numbers, look at the deposits, check the average daily balance, and can usually give you an answer the same day. Sometimes within a few hours.

So, should you apply?

If you're a business owner doing over $10k a month, you've been open for at least six months, and you need capital quickly for inventory, payroll, expansion, or just a safety net... then yes. You absolutely qualify for a review.

And frankly, even if you think your situation is "messy," it’s worth a conversation. We see messy all the time. Real business is messy. We aren't looking for perfection; we're looking for potential.

I’ve had folks tell me they were denied by everyone else, and we found a way to make it work because we actually took the time to understand why their bank statements looked a certain way that one month.

If you want to know for sure, just reach out. Check your eligibility here on the site. It doesn't hurt your credit to look, and myself or one of the other guys here at LoanQuail will take a look. We'll give it to you straight.