Revenue floors by product, and why they are floors rather than thresholds

Where a minimum revenue figure comes from

Work it backwards and the number stops being mysterious.

A funder has a smallest deal it will write, below which the cost of underwriting, funding and servicing eats the margin. It also has a limit on how much of your daily cash it will take, because taking too much kills the business it is collecting from. Put those two constraints together and a deposit floor falls out.

Illustrative only — suppose a funder will not write below $10,000, expects the money back inside six months, and will not size a daily debit above a tenth of daily deposits. Six months of banking days is roughly 126. A $13,000 total repayment over 126 days is about $103 a day. For $103 to be a tenth of daily deposits, daily deposits need to be about $1,030, which is roughly $21,600 a month. That is the floor, and it was produced entirely by the product's own mechanics.

Change any input and the floor moves. That is why floors differ so much between funders offering what looks like the same product, and why a funder's floor tells you more about its cost structure than about your business.

What the floor implies by product

Each product family has a different shape, so the constraint bites differently.

Why clearing the floor is not the point

A floor is a filter at the front of a workflow. Clearing it moves your file to the next stage; it does not make the answer yes, and it says nothing about the price you will be quoted.

What sits behind the floor and actually drives the offer:

Revenue is not margin, and underwriters know it

A business at $400,000 a month in revenue with a two percent net margin is generating about $8,000 of profit a month. A business at $90,000 a month at eighteen percent is generating about $16,200. The first one clears every revenue floor in the market and is the weaker credit.

This matters because deposit-based underwriting is measuring the wrong variable on purpose — it uses deposits because deposits are verifiable, not because they are the best predictor. The thin-margin business shows up as a strong file at the automated stage and then runs into trouble in three specific ways.

1. The remittance is sized against revenue, so it is enormous relative to profit. A daily debit set as a share of a $400,000 monthly deposit flow can exceed the entire monthly profit. The business then services the advance out of working capital, and the shortfall reappears six weeks later.
2. Any human review reads the mismatch. Large deposits with a thin cushion, no accumulating balance, and a payroll line that consumes most of the inflow is a recognisable pattern. It usually produces a smaller offer than the deposit figure alone would suggest.
3. Tax returns contradict the statements. If the file goes anywhere near a bank, an SBA lender, or a 4506-C transcript pull, the profit figure arrives and the picture changes.

If that is your business, the useful move is to bring the margin number yourself. A one-page profit and loss with the gross margin, the fixed cost base and the actual monthly surplus lets you argue for a smaller, longer, cheaper structure instead of the one the deposit figure implies. The mismatch is easier to explain before it is discovered.

Two questions to ask any funder

Ask what revenue figure they use — gross deposits, adjusted deposits, or the lowest month — and over what window. Then ask what remittance the offer implies as a share of that figure. Those two answers tell you both whether you clear the floor and whether the structure on the other side of it is survivable, which are entirely different questions.