Monthly Revenue Requirements: How Much Do You Need to Qualify?

Why there is a revenue floor

Revenue shows the scale of money moving through the business, which sets how large a payment it can carry.

Every payment has to come out of deposits after costs. If a business deposits $8,000 a month and spends $7,500 to operate, a $1,500 payment is impossible. If it deposits $60,000 and keeps $9,000 after costs, the same payment is manageable.

Revenue floors are a blunt way of screening for that. They are not perfect, since margins vary wildly between industries, but they give funders a consistent first test. Further tests, such as average balance and existing debt, refine the answer. See business loan underwriting.

How revenue is counted

Funders count verified customer deposits in your business bank account, averaged over recent months, excluding transfers and loan proceeds.

What usually counts:

• Customer payments by card, ACH, check and cash deposits you make to the account.
• Payments from payment processors that settle into the account.

What usually does not:

• Transfers between your own accounts.
• Loan or financing proceeds.
• Owner contributions.
• Refunds and returned items.

Funders typically average the last three months. So one strong month does not rescue two weak ones, and seasonal businesses should be ready to explain their pattern. If you take cash and do not deposit it, that cash does not appear in the number. Deposit consistently, because what the statements cannot show cannot be counted.

How funding amounts relate to revenue

Funders often size an offer as a fraction of monthly revenue, so higher deposits support larger amounts, subject to margins and existing debt.

The ratio varies by funder and product, so there is no formula to count on. A common approach is to cap the amount at a multiple of average monthly deposits and to cap the payment at a share of them. Existing obligations reduce what is left.

The more useful calculation is your own. Start from deposits, subtract operating costs and existing payments, and see what remains. That is what any new payment must come from. Our guides on how much of revenue can go to loan payments and how much funding your business can afford show the arithmetic. Illustrative example: $50,000 in deposits, $42,000 in costs and payments, leaves $8,000 of room.

Revenue versus profit

Funders see deposits first, but a business with thin margins can have strong revenue and still be unable to carry a payment.

High-volume, low-margin businesses, such as grocers, fuel stations and distributors, can deposit a great deal and keep very little. Good funders look past the headline. Expect questions about margin, existing debts and fixed costs.

For your own planning, do not size funding on revenue. Size it on cash left after costs. A cash flow versus profit review will show whether the business generates enough free cash to support what you want to borrow.

If your revenue is below the floor

Raise deposits through collections and pricing, clean up what the statements show, and look for products that fit your current scale.

Steps that move the number:

1. Run all business sales through the business account, including card and cash deposits.
2. Collect overdue invoices before you apply.
3. Keep personal and transfer money out of the account so deposits are easy to read.
4. Wait until a strong stretch enters the three-month average, if timing allows.
5. Ask whether a smaller amount or a different product fits better.

Equipment financing is secured by the asset, so it can work for some owners with smaller deposits. Be careful about overborrowing to hit a target; the payment still has to fit.

Revenue in different business models

Deposits look different depending on how the business is paid.

A restaurant deposits card batches daily. A contractor deposits large checks a few times a month. An online store sees payouts from a processor every few days. An agency invoices on net 30 and sees lumpy deposits. Funders read each pattern in context, but you can help by labeling processor deposits and noting how your customers pay.

If your income is lumpy, include a short note describing the cycle. That context keeps an uneven month from being read as a decline.

It also helps to keep a running three-month average on a sticky note or spreadsheet. Before you apply, check it against the floor you are targeting. If you are within ten percent, a few more weeks of clean deposits may be all you need, and applying then gives a better first impression than applying early.

How ROI Funder applies the requirement

ROI Funder looks for $20,000 or more in monthly revenue with 6+ months in business and 500+ FICO considered, then matches the file to funders.

The application takes a few minutes and uses a soft credit pull, so there is no impact on your credit score and no obligation to accept an offer. With the application and three months of business bank statements, approved files can fund the same business day, in amounts from $5,000 to $5,000,000.

Compare it with the time in business requirement, and see which structure suits your revenue pattern: revenue-based financing flexes with sales, while a term loan has a fixed payment. Start on the application page.